Analyzing the Obama administration

When he was inaugurated in January, President Barack Obama enjoyed soaring public approval ratings and his presidency was full of positive expectations for a majority of Americans. Will the president be able to fulfill the promise of his historic election victory?

Although it is much too early to make an ultimate judgment, it is appropriate to reflect on the president's governing style during his first nine months in office and what his initial actions may portend for the remaining years of his presidency. Certainly, there is much at stake for the roofing industry, along with all Americans, in terms of the effect of President Obama's policies on the economy and the ability to start and/or grow a business. So let's analyze the president's actions on a few domestic policy issues that have the potential to affect the roofing industry.

Economic growth

First, let's look at the top issue of interest to most voters and one that is critical to the roofing industry—economic growth and job creation. Of course, President Obama entered office in the middle of what may be the greatest financial and economic crisis since the Great Depression, and it would be unfair to expect any administration to be able to restore economic growth immediately. However, we can make a preliminary judgment about his initial actions on the economy and how they may affect future economic conditions within which entrepreneurs must make critical business decisions.

Obama's first major action after taking office was to work almost exclusively with the Democratic leadership in Congress to craft an economic stimulus package aimed at jump-starting economic growth. The $787 billion American Recovery and Reinvestment Act (H.R. 1), also known as ARRA, consisted of roughly two-thirds government spending programs and one-third tax cuts compared with an alternative package offered by Republicans that was about half the total cost and relied more on tax cuts aimed at spurring private investment rather than on government spending initiatives.

Moreover, rather than sending his own proposal to Capitol Hill, the president left the task of writing the bill to Democratic leaders in Congress. As such, it contained billions of dollars in spending on government programs that many critics claim have questionable value in terms of generating economic investment and job creation.

Although the bill also authorized spending and tax provisions that NRCA considers appropriate for stimulating economic growth in a severe recession, any short-term benefits may be offset by the need to raise taxes in the future to pay the large debt incurred by the bill. A substantial portion of these taxes undoubtedly will affect businesses, including small businesses, which are the nation's primary job creators, and could negatively affect economic growth.

Although debate about the merits of the ARRA and its economic impact will continue for some time, it is clear that, in his first major test, the president chose to pursue policies that heavily favored increased government spending over boosting private investment.

The federal budget

The next major issue was Congress' passage of the federal budget resolution, which largely adopted President Obama's budgetary priorities. Again, the president chose to pursue policies that appealed primarily to liberal Democrats by proposing a budget heavy on government spending and tax increases.

This was reflected in the votes of the House and Senate. The House voted 233-193 to approve Obama's budget with all Republicans and 17 moderate Democrats opposing it. The Senate vote produced a similar result as three Democrats joined all Republicans in opposing the resolution.

The president's budget has major implications for economic growth and the ability to start and maintain a business. In August, the administration raised the official projection of the federal deficit during the next 10 years to $9 trillion, up from a projection of $7.1 trillion issued in May.

According to this estimate, by 2019, the government's total debt will roughly triple from current levels and will represent 76.5 percent of gross domestic product, up from about 56 percent in 2009. In 2019, interest expense on the debt will account for 80 percent of the projected one-year deficit of $917 billion.

The level of debt being incurred by the government to finance the president's spending initiatives likely will profoundly affect future economic growth. NRCA's leadership has serious concerns about the outlook for the federal deficit, and opinion polls indicate this is of growing concern to the public, as well.

Climate change legislation

NRCA hopes the Obama administration will work with Democrats and Republicans to craft a pragmatic "climate change" bill that can garner broad support. Roof systems that increase buildings' energy efficiency and/or generate renewable energy have a positive role to play in addressing climate change and other environmental issues, and NRCA is striving to work with the administration and Congress on this issue.

In June, the President endorsed a 1,200-page climate change bill (H.R. 2454) written by Rep. Henry Waxman (D-Calif.) that contains a controversial "cap-and-trade" program to regulate carbon emissions. The bill passed by a narrow 219-212 vote, and though it was supported by eight Republicans, 44 Democrats voted against it because of concerns about its potential economic impact.

NRCA supports legislation to reduce carbon emissions that balances environmental objectives with the need to sustain economic growth and job creation. NRCA opposes the House climate change bill because of concerns about the potential effect a cap-and-trade system may have on the roofing industry and the broader U.S. economy. Additionally, the House climate change bill attempts to rapidly accelerate energy-efficiency standards for residential and commercial buildings through a national building code that some critics have said will cause serious disruption in the construction industry.

In the Senate, the House bill has received a tepid response from moderate Democrats and is strongly opposed by Republicans. However, several Republicans recently have indicated they are willing to work constructively on a climate change bill that balances economic needs with environmental goals. This issue provides an opportunity for the president to chart a course that can garner significant bipartisan support in the Senate.

Immigration issues

NRCA hopes to work closely with the Obama administration on matters related to immigration, a key issue for the roofing industry, and commends the new leadership at the Department of Homeland Security (DHS) for its decision to rescind the "no-match" rule issued in 2008 by the Bush administration.

NRCA opposed the no-match rule because of its expected burden on employers and legally authorized workers, as well as its ineffectiveness in combating illegal immigration. NRCA, as part of a coalition of business and union organizations, provided substantial resources to support litigation that resulted in a court injunction that successfully blocked the rule's implementation.

President Obama's DHS ultimately agreed the no-match rule would have been burdensome for employers and workers while also being counterproductive to combating illegal immigration. DHS put an end to the rule by formally rescinding it in October.

Although NRCA was pleased with the administration's decision, it was disappointed DHS decided to move forward with a Bush administration proposal to mandate the use of the E-Verify pilot program by federal contractors that perform certain types of contracts.

NRCA supports the E-Verify program on a voluntary basis but has serious concerns with rapidly expanding and mandating its use by employers. E-Verify uses a database that has a high error rate, and this could cause serious problems that are similar to the concerns with the no-match rule.

Although many NRCA members have used E-Verify voluntarily without encountering major problems, others recently have reported serious difficulties since the rule mandating use by federal contractors took effect in September. NRCA hopes the Obama administration will be receptive to working with the business community as more is learned about the E-Verify program as it is expanded into greater portions of the private sector.

NRCA also looks forward to working with the Obama administration on comprehensive immigration reform legislation and is pleased the president has made this issue a priority for his administration. However, pushing through an immigration reform bill in an election year with unemployment approaching 10 percent will be extremely difficult and will require strong leadership from the White House if the effort is to be successful.

"Card check" legislation

One of NRCA's legislative priorities is defeating the so-called Employee Free Choice Act (H.R. 1409/S. 560), or EFCA, also known as "card check" legislation. The bill effectively would replace secret-ballot elections for union organizing with a card check format in which workers' votes would be made public. The bill also would establish binding arbitration under which a government-appointed arbitrator would impose a two-year labor contract with no recourse for either workers or employers if management and labor cannot agree within 120 days of negotiations.

Organized labor, a close ally of the administration, has made EFCA it's No. 1 legislative priority but has been unable to secure the 60 votes needed in the Senate to overcome an expected Republican filibuster against the bill. President Obama has said as a candidate and president that he strongly supports EFCA and looks forward to signing the bill into law. However, he appeared to back off his support for EFCA early this year when he told The Washington Post that it may be necessary for organized labor and business to find a compromise.

NRCA believes passage of EFCA could be devastating to employers because the binding arbitration requirement could result in basic business decisions being made by outsiders with little or no experience with running a business. Also, NRCA believes the secret-ballot election is a cornerstone of U.S. democracy that has shielded workers from intimidation from employers and unions and, therefore, should be preserved to protect workers.

EFCA supporters in Congress have apparently had little success in developing a compromise that can garner 60 votes in the Senate. It remains uncertain how forcefully the administration will push for Congress to take action on this issue.

Health care reform

NRCA has worked for many years in support of bipartisan legislation designed to expand access to affordable health insurance coverage. In 2008, NRCA testified before the House Small Business Committee in support of bipartisan health care reform legislation sponsored by Rep. Nydia Velázquez (D-N.Y.). As such, NRCA hopes to find common ground with the Obama administration on this critical issue.

However, President Obama has endorsed health care reform proposals by Democratic leaders in Congress that would greatly expand government programs and mandates in an attempt to expand health insurance coverage.

In July, Obama endorsed a $1 trillion-plus health care reform proposal (H.R. 3200) released by House Speaker Nancy Pelosi (D-Calif.) that drew support mostly from the far left of the political spectrum. The bill includes a government-run public health plan option and a "pay-or-play" provision that requires most employers to provide a newly mandated level of coverage to workers. Also, the bill is financed with hundreds of billions of dollars in new taxes, many of which would directly affect small businesses.

NRCA is concerned that H.R. 3200, by relying heavily on government programs and mandates in its attempt to expand health insurance coverage, fails to address the fundamental problem faced by the U.S. health care system—uncontrolled cost increases. This fear was heightened in July when the head of the nonpartisan Congressional Budget Office (CBO) testified that H.R. 3200 and a similar Senate bill do not contain the "fundamental changes" necessary to "bend the cost curve" downward. Moreover, the CBO said H.R. 3200 likely would exacerbate the problem of rising health care costs and, by extension, further add to the federal deficit.

NRCA also is disappointed H.R. 3200 does not include medical liability reforms that would address the problem of frivolous lawsuits, a significant cost driver in the U.S. health care system. The Department of Health and Human Services estimates medical liability reform could save up to $500 billion during a decade. With close to 70 percent of the public supporting medical liability reform, insisting this problem be addressed despite the objections of trial lawyers represents a unique opportunity for the president.

During the summer, H.R. 3200 was narrowly approved by three House committees without any Republican or moderate Democrat support. After months of difficult negotiations, Pelosi was able to gain House approval of a revised health care reform proposal (H.R. 3962) with a public plan on a narrow 220-215 vote in early November. However, moderate Democrats and Republicans in the Senate remain resistant to the public plan and other provisions of the bill.

It remains unclear whether President Obama will be able to break the impasse between liberals and moderates within his own party to produce a health care reform bill that can be approved by Congress. If the president is able to work with moderates on a bipartisan bill that can gain broad support from the public, it could be an achievement of truly historic proportions.

Presidential approval ratings

As mentioned earlier, the president enjoyed strong approval ratings among the public at his inauguration and for several months thereafter. However, since early summer, his approval ratings have plummeted to less than 50 percent in some polls. For example, a Rasmussen poll of likely voters in late October indicated Obama's approval rating was at 48 percent with 51 percent disapproving.

Although Obama's approval rating has not descended to the level of several other presidents at the end of their terms in office, the swiftness of the decline in his numbers this early in his presidency is virtually unprecedented.

The main reason for the sharp decline in Obama's public approval rating is the loss of support among political independents, a growing segment of the electorate that voted for him overwhelmingly in 2008 and was critical to his victory. It appears the president has lost the support of independents because he has largely pursued liberal policies rather than governing as the moderate portrayed during the presidential campaign.

Time will tell

Can the president win back independents if he moves toward the center on key issues in the months and years ahead? He probably can and certainly will have the opportunity to do so. NRCA is ready to engage the Obama administration and Congress to tackle difficult issues in a bipartisan, pragmatic way.

Many observers believe the partisan bickering between Democrats and Republicans in Congress is growing and, therefore, it is becoming more difficult for lawmakers to work together constructively to address the challenges confronting the U.S. Given what is at stake, it may be more important now than ever for President Obama to provide the strong leadership needed to build broad support among the public and lawmakers of both parties on the key issues facing the nation.

Duane L. Musser is NRCA's vice president of government affairs.