Letter to the Senate on H.R. 1, the "American Recovery and Reinvestment Act of 2009"
February 3, 2009
TO THE MEMBERS OF THE UNITED STATES SENATE:
The U.S. Chamber of Commerce supports President Obama's call for timely, targeted, and temporary stimulus legislation that would work in conjunction with monetary policy to jump start the U.S. economy. Although the Chamber believes the Senate version of H.R. 1, the "American Recovery and Reinvestment Act of 2009," would take important steps towards providing economic stimulus, the legislation does not yet pass the President's test. The Chamber supports many of the tax and spending related provisions in the bill, but many others could be strengthened, refined, or eliminated. The Chamber looks forward to working with the Senate and House to achieve meaningful stimulus legislation.
The Chamber strongly supports several tax-related provisions of the legislation, including
- Extend the net operating loss (NOL) carryback period;
- Provide for bonus depreciation, including extending bonus depreciation to the film industry, and allow a refundable alternative minimum tax (AMT) credit in lieu of bonus depreciation;
- Increase small business expensing;
- Provide AMT relief;
- Provide a housing credit; and
- Extend the Trade Adjustment Assistance program.
The Chamber also supports other provisions in the bill, but believes they could be
- Cancellation of Indebtedness—The Chamber applauds the inclusion of the provision on cancellation of indebtedness (COI), which can be a useful tool to the private sector to provide economic growth. However, the Chamber believes this provision must be expanded to provide necessary flexibility and apply to all restructurings, including debt-for-debt, equity-for-debt, cash-for-debt, and similar exchanges. Further, amending this provision to provide not only for deferral of COI income, but also to exempt some or all of COI income from taxation for a limited period of time, would more effectively preserve jobs, facilitate the deleveraging of the U.S. economy, and strengthen financial institutions' balance sheets.
- 3% Withholding—The Chamber supports provisions to delay implementation of the 3% tax withholding on all government payments, but believes full repeal is a more sensible solution.
- Energy Incentives—The Chamber supports the energy tax incentives, but believes they should be extended to all clean energy technologies, such as nuclear energy and clean coal. Incentives should be expanded to include research and development costs for "green" technologies, such as clean Diesel and hybrid technologies.
The Chamber urges the Senate to include other provisions, which would help improve financial liquidity, spur economic activity, and stimulate job growth, such as:
- Temporarily allowing earnings from foreign subsidiaries of American companies to be repatriated at a reduced tax rate;
- Providing a payroll tax holiday;
- Amending the Foreign Investment in Real Property Tax Act rules to remove barriers that prevent foreign investors from injecting equity capital into commercial realestate;
- Modifying the Real Estate Mortgage Investment Conduits rules to reduce limitations on the restructuring of commercial mortgage-backed securities;
- Modernizing the cancellation of indebtedness rules applicable to REITs to facilitate loan restructuring and provide relief to the distressed real estate industry;
- Reducing the corporate capital gains rate to 15% to encourage unlocking of appreciated assets held by companies; and
- Implementing temporary modifications to funding rules to allow companies to address the financial crisis' impact on pension funds.
The Chamber believes many provisions of the appropriations portion of the legislation could be improved to provide greater stimulus to the economy, especially provisions related to:
- Transportation Investment—The Chamber supports a significant increase in transportation infrastructure spending to at least the levels provided in the Housepassed version of H.R. 1. Shrinking state budgets and the tightening credit market are leaving many planned projects without direct funding or financing. The already massive backlog of maintenance on America's roads, rails, public transportation systems, aviation facilities, and inland waterways and ports is growing. Greater transportation investment would preserve and create jobs in the short-term, and provide long-term economic benefits by helping improve the movement of people and goods.
- Energy—The Chamber urges the Senate to increase spending on items related to energy efficiency, the electricity grid, climate change, and technology provisions provided by the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007. The Chamber urges that the renewable energy programs provided in H.R. 1 include all renewable energy technologies, including nuclear, biomass, hydropower, and others, in addition to wind, solar, and geothermal. Moreover, the Chamber supports including an additional $50 billion in loan guarantee authority for deployment of all clean energy technologies.
- Permit streamlining—The Chamber urges the Senate to include provisions to streamline the siting and permitting process for projects funded in this legislation. Without streamlining, the National Environmental Policy Act, Clean Air Act, Endangered Species Act, or other laws could unnecessarily delay—potentially by months or years—or block "shovel ready" projects.
- Airport Infrastructure—Although the Chamber supports the $1.2 billion this bill would provide to accelerate procurement and installation of baggage screening and checkpoint security equipment at airports across the country, the Chamber believes additional targeted spending is needed for security infrastructure improvements to increase the flow of people and goods through security checkpoints, in addition to increasing investments to modernize antiquated air traffic control system and enhance airport infrastructure.
- TARP—Making Troubled Asset Relief Program funds available to expand access to the Commercial Paper Funding Facility to Tier 2 commercial paper and to capitalize a Federal Reserve liquidity facility for commercial mortgage backed securities;
- Travel Promotion—The Chamber urges Congress to include legislation approved in 110th Congress, H.R. 3232, the "Travel Promotion Act," as part of H.R. 1. The Travel Promotion Act would help preserve jobs in the tourism sector by increasing visitors from overseas, who tend to spend an average of $4,000 per person per visit at U.S. retailers, hotels, restaurants, attractions, and other businesses.
- Cybersecurity—The Chamber believes the $14 million provided in the legislation to expand cyber security research to better address critical infrastructure vulnerabilities should be greatly increased.
The Chamber strongly supports several spending provisions provided in the bill,
- Border security—The Chamber supports provisions to reduce the $6 billion construction backlog for points of entry, which would improve security and facilitate commerce. Border delays contribute to tens of billions of dollars annually in lost revenue. These provisions would decrease supply chain costs for American companies and promote travel, transportation, and trade, while simultaneously improving security.
- Port and Rail Security—The Chamber supports provisions to secure ports and the rail system.
- Broadband—The Chamber strongly supports funding of the Broadband Data Improvement Act, which authorized a state-based grant program to develop and maintain a map of current U.S. broadband deployment.
- Census—The Chamber supports provisions to provide necessary resources to the Census Bureau to bolster its efforts for the upcoming decennial census.
- Small Business—The Chamber strongly supports the Senate approach to access to capital over the house passed stimulus provisions. Established funding levels that would allow the temporary elimination of lender and borrower fees for the SBA 7(a) and 504 program would quickly and most efficiently incentivize the existing network of financial institutions to make affordable loans to small business.
- NASA—The Chamber supports provisions related to NASA funding.
- Education—The Chamber supports funding to increase the maximum Pell grants.
The Chamber also opposes a number of provisions in the bill as currently crafted, and provisions that could be offered as amendments, related to:
- Buy American—The Chamber strongly opposes any amendments, should they be offered, that would require use of U.S.-produced iron, steel, and manufactured goods for public building projects funded through this legislation. Such requirements would undercut U.S. international commitments and would likely result in retaliatory sanctions in foreign markets.
- COBRA—The Chamber opposes provisions of the legislation to heavily subsidize COBRA. Such requirements would increase healthcare costs for small businesses, and would raise health insurance costs for American workers because COBRA enrollees are generally more costly to insure. Further, this legislation does not include an appropriate transition time for employers to develop methods to implement and administer subsidies and amend plan practices.
- Health Information Technology—The Chamber believes spurring development and adoption of health information technology (HIT) is an important step toward creating a more affordable, quality health system and that the promulgation of national standards and codification of the Office of the National Coordinator of HIT are key steps in this process. However, the Chamber believes adoption of HIT could be greatly hindered by the implementation of onerous privacy standards, particularly if a patchwork of conflicting state rules, rather than uniform national standards, are allowed to govern. This legislation provides state attorneys general the ability to bring civil action as a means of enforcing the HIPAA Privacy Rule as well as the broad definition of data breach.
- Basic Pilot/E-Verify—The Chamber opposes any mandate that all entities that receive money from the stimulus package use the flawed experimental Basic Pilot/E-Verify program. Such a massive backdoor expansion of the Basic Pilot/E-Verify program is estimated to result in net societal costs of $10 billion a year.
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, looks forward to working with the Senate and House to craft economic stimulus legislation to provide a much needed shot in the arm for the U.S., and to get American workers back to work.
R. Bruce Josten