Letter to the full House on H.R. 1, the "American Recovery and Reinvestment Act of 2009"
January 27, 2009
TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:
The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, is deeply disappointed with H.R. 1, the "American Recovery and Reinvestment Act of 2009." The Chamber supports President Obama's call for a timely, targeted, and temporary stimulus program that would work in conjunction with monetary policy to jump start the U.S. economy, currently mired in what may be the worst economic downturn since the Great Depression. Unfortunately, the House approach fails the President's test in every category: the spending is unfocused; it comes on line too slowly; and, it lasts well beyond what would commonly be labeled temporary.
The Chamber believes that a truly effective stimulus package must have the proper balance of tax and spending provisions to trigger near-term economic growth while underpinning long-term economic growth. While the Chamber supports certain tax relief provisions in H.R. 1, notably extending the net operating loss (NOL) carryback period, providing for bonus depreciation, increasing small business expensing, fully repealing the 3% tax withholding on all government payments, and including a housing credit, the Chamber believes that the tax provisions in H.R. 1 are simply too small to have the desired impact.
The Chamber has repeatedly urged the inclusion of provisions which would be timely, targeted, and temporary and would have a significant stimulative effect. As the Chamber has previously indicated, action is desperately needed to address the severe ongoing liquidity crisis, preserve and create jobs, and induce economic growth. The Chamber is disappointed with the lack of truly stimulative provisions in this bill and believes that the inclusion of the following provisions is necessary to most effectively stimulate the economy:
- temporary tax relief from cancellation of indebtedness income;
- temporarily allowing foreign subsidiary earnings of U.S. companies to be repatriated at a reduced tax rate;
- temporarily providing a payroll tax holiday;
- making TARP funds available to expand access to the Commercial Paper Funding Facility (CPFF) to Tier 2 commercial paper and to capitalize a Federal Reserve liquidity facility for commercial mortgage backed securities; and
- provisions that allow companies to address the financial crisis' impact on pension funds would do much more to restore liquidity, spur economic activity, and stimulate job growth.
The Chamber believes many of the programs funded in H.R. 1 would help set the stage for long-term growth. Notably, the Chamber strongly supports infrastructure spending which directly supports jobs and helps meet the demands of pressing economic, safety, energy, and environmental needs; funding for the energy efficiency and technology provisions in the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007, which address global climate change and enhancing America's energy security; and provisions which provide access to capital for small businesses. Further, the Chamber applauds the inclusion of funding for education, aviation safety, Manufacturing Extension Partnerships (MEP), the census, NASA, state-based Broadband initiatives, and Health Information Technology (I.T.).
However, while supportive of the above provisions, the Chamber strongly opposes:
- The requirement for use of U.S.-produced iron and steel for public building projects funded through this legislation, which would undercut our international commitments and cause retaliatory sanctions in foreign markets.
- The open access and net neutrality requirements in the Wireless and Broadband Deployment Grant Programs, which are unnecessary and would hinder broadband infrastructure investment, innovation, and consumer choice.
- The expansion of COBRA eligibility and duration, which imposes significant compliance burdens on and economic costs to employers with no preparation time for implementation.
- The mandate that all entities that enter into a contract under this legislation use the flawed and experimental Basic Pilot/E-Verify program, which would harm workers and businesses.
- The refusal to extend the bill's incentives to all clean energy technologies (such as nuclear energy), which, like renewables, would create jobs and reduce emissions.
- The allocation of Department of Labor functions not related to job creation.
- The expansion of the application of the Davis-Bacon Act to cover loan guarantees for energy related construction authorized by the Energy Policy Act of 2005.
The Chamber believes the proper balance and composition of tax and spending provisions that, in the short-term, encourage investment, save jobs, and reduce debt levels, are essential. Policies that would, in the long-term, enhance stable economic growth are also vital. The Chamber remains deeply disappointed in the House stimulus package and urges you to make needed improvements prior to final passage.
R. Bruce Josten