Podcast Sponsored by West Texas National Bank
This is Eric Wareham, Vice President of Government Affairs for WEDA, and welcome to another edition of Legislative Landscape. Normally August is a slow time for legislative issues and Congress typically sits in recess for the month of August. However, these times as of late are anything but usual and there is an unprecedented level of legislative and regulatory activity happening right now.
To begin with, the U.S. Senate just passed a bipartisan infrastructure bill 69-30. It has been quite some time since a major piece of legislation has received that kind of support from both sides of the aisle. As for the bill itself, the roughly $1 trillion package includes additional spending of $550 billion over five years on infrastructure. Of that amount, there is a split of 83 percent for hard infrastructure such as roads and bridges and 17 percent for public transit. There is also $65 billion to expand high-speed internet access, which would mostly benefit rural Americans and close the digital divide. To finance the project, money was used from a variety of sources that does not significantly increase taxes but does rely on adding over $256 billion to the deficit over ten years-more on that later.
The conversation is already turning to what the House will do once the bill is transmitted to them. House Speaker Pelosi has already stated that the fate of the infrastructure bill is tied to the passage of the proposed $3.5 trillion dollar ‘human infrastructure’ bill that the Biden administration released earlier this year, calling it the ‘American Families Plan.’ This makes the discussion far less bi-partisan as the ‘human infrastructure’ package contains not only massive new spending but also massive tax increases assailed by members of both parties as going too far.
Many of you are already familiar with some of the tax proposals included in the ‘human infrastructure package.’ Those tax increases include items like a new top capital gains rate of 43.4 percent, a new capital gains tax on unrealized gains over $1 million on top of any estate tax liability, and raising the top estate tax rate to 65 percent with estate tax exemptions reduced to $3.5 million per spouse. Many commentators and legislators have pointed out that this would cripple family-owned businesses, especially farms and ranches, as they are passed down to the next generation. The cumulative effect of these proposals imposes effective tax rates of 60 percent of more on these businesses, which is untenable and would create drastic unintended consequences. For our industry, we are already seeing ramped-up consolidation of dealerships partly driven by anticipation of tax changes such as these.
The U.S. Senate this month took steps toward moving a budget resolution that would contain these provisions. As a prelude to the partisan reconciliation process Democrats intend to use for passage of the ‘human infrastructure’ bill, the Senate Appropriations Committee approved several funding bills including an Ag funding bill. The legislation passed out of committee includes an additional $6.8 billion in disaster assistance spending for producers who suffered losses due to droughts, hurricanes, wildfires and floods in 2021. It also includes $750 million for ranchers’ losses during 2021 due to drought or wildfire.
Lurking behind all of these massive spending proposals is the issue of the debt limit. Although it might not seem like it, there are limitations on D.C. spending and the Congressional Budget Office projects that the Treasury will reach its borrowing capacity by late October or early November. This is setting up a debt limit showdown that has resulted in government shutdowns in the past. With the amount of new spending Democrats are seeking through unilateral action, this is the issue Republicans will be able to stand their ground on and possibly bring some fiscal sanity back into the discussion.
If all of that wasn’t enough for you to digest, we also have federal action on Right to Repair. As WEDA alerted you about earlier, the Biden administration issued an executive order containing over 70 directives. One of them encouraged the FTC to promulgate rules for Right to Repair, specifically for farm equipment. As we reported, the language used by the executive order and supporting documents was woefully uninformed and misguided. The FTC took quick action to adopt a policy position supporting Right to Repair, but has not promulgated any rules with the affect of law.
One question the executive order raises is whether this issue will be elevated to a national instead of state question. There is certainly more sense in communicating our industry’s position to one level of government rather than fifty, however state legislators may not see it that way and proceed with their own legislation now that they are emboldened by the executive order. Oklahoma just approved an interim study on Right to Repair legislation after Biden’s executive order was released giving credence to that theory.
Either way, WEDA is not sitting back and waiting for our fate to be decided on the issue. As we have done for several years now, we are being proactive in our approach. You will be seeing new material on Right to Repair shortly that shares our industry’s story on how we support our customers ability to repair their own equipment. This information will be critical to educating both federal and state policymakers about the industry commitment we have made to our customers and what we do to support that. Look for more on that in the near future.
With all of this happening in the midst of harvest, one can be forgiven for not keeping up with every development. As always, WEDA is here for any of your questions or concerns so please do not hesitate to contact your association about any policy issues. Have a great harvest, and keep those in mind who are struggling through a very tough harvest year in parts of our country.
Podcast By Eric Wareham
Eric Wareham is vice president of government affairs for the Western Equipment Dealers Association. He is a graduate of the Willamette University College of Law and Augusta State University. Eric may be reached by writing to email@example.com.