You Better Watch Out

While the calendar shows the month of December, and the count down to Christmas and the new year is well underway, it would serve manufacturers well to keep one eye focused on Washington, D.C. during this time.

For manufacturers, charting a course amid today’s business and political climates was likened in Crain’s Cleveland Business to, “steering a ship through choppy seas with no map or weather forecast, all while being bombarded by proposed government policies they fear will sink them”. Who would be surprised to learn that manufacturers are not inclined to load up their ships with new crew members and equipment while under attack?

With what many believe to be threatening and counterproductive developments coming out of Washington and Congress, which is still in session, we need to look at several important issues that are very much on the table in spite of the holiday cheer.

Estate tax: The House bill (HR 4154), would extend the current rate of 45%, rather than allow the rate to fall to zero in 2010, and then rebound to 55% in 2011, as it would under the current law. The exemption levels in the bill also would remain at 2009 levels, providing individuals with a $3.5 million exemption and couples with a $7 million exemption.

Some business groups are supporting a bill (HR 3905) sponsored by Rep. Shelley Berkley (D-NV) that would go further than the pending House bill and gradually raise the exemption to $5 million, cut the estate tax rate to 35%, rate and index the exemption for inflation. Earlier this year, a majority of senators backed a similar approach proposed by Sens. Jon Kyl (R-AZ) and Blanche Lincoln (D-AR). As an alternative, some Democrats are considering a one- or two-year extension of 2009 rates, which would temporarily postpone a decision on the permanent structure of the tax, while also preventing the tax from disappearing in January.

Health Care: Democrats’ health care push will be coming from Senate leadership office, where Majority Leader Harry Reid (D-NV) will attempt to negotiate a compromise on the public insurance option that can garner 60 votes and win over a public still leery of reform.

Republicans want six weeks of debate, pushing the final vote past Christmas. But Democrats can short-circuit the debate all at once, simply by reaching a deal on the public option and filing cloture on the bill, which would set up the final crucial test vote before final passage. Asked when he thought the debate would end, Sen. Ben Nelson (D-NE) said, “When there are 60 votes.”

The votes of Sens. Ben Nelson (D-NE), Mary Landrieu (D-LA), Blanche Lincoln (D-AR), Olympia Snowe (R-ME) and Joe Lieberman (I-CT) will be key to any bill the House would accept and the President would sign.

While the Majority Leader searches for a compromise that will bring his needed 60 votes, others see his bill as being fatally flawed.

Charles Krauthammer writing in the Washington Post said, “The bill is irredeemable. It should not only be defeated. It should be immolated, its ashes scattered over the Senate swimming pool.”

Krauthammer believes the health care issue should be addressed one reform at a time, each simple and simplifying, aimed at reducing complexity, arbitrariness and inefficiency. He suggest, the better choice is targeted measures that attack the inefficiencies of the current system one by one, tort reform, interstate purchasing and taxing employee benefits. He said, “It would take 20 pages to write such a bill, not 2,000 and provide the funds to cover the uninsured without wrecking both U.S. health care and the U.S. Treasury.”

Cap and Trade: While Senate action is not expected this month, watch for news coming out of the Copenhagen Climate Conference, in the coming week, to point the administration’s direction on moving the Senate to take action taxing carbon emissions in early 2010.

Card Check: Labor’s proposed Employee Free Choice Act, like Cap and Trade, has been pushed to the back burner. This bill is not dead by any stretch of imagination, it’s supporters are simply watching the current health care battles, while planning their moves for early 2010.

Regardless of your position on any of the above mentioned legislation, now is the time to let your Senators hear your voice on these and other important issues that have a real effect on manufacturers.