Technically speaking, the second session of the 110th Congress does not start until January 2008, but, in fact, it has already begun. By early next year, the presidential nominees for each major political party will be known, and the general election campaign will further stall any significant legislative activity. Nominees will become the new leaders and faces of their respective parties, and most expect Congress will defer to them. Plus, neither party will want to allow the other to claim a legislative victory in the race to the Nov. 4, 2008, election.
This will not bring about a big change in terms of substance because with only two laws passed of any consequence—the minimum-wage hike and ethics reform—this has not been a productive Congress. Most debates between the parties have stayed along party lines, and neither Democrats nor Republicans are expected to reach consensus. But adding a new twist will be President Bush's more frequent use of vetoes, particularly on spending bills.
None of the 12 annual appropriations bills had been sent to President Bush when Congress took its August recess, and there were only 19 legislative days to complete work on those bills before the federal government's fiscal year ended Sept. 30. This is not an unusual situation for Congress, and it typically hustles through temporary funding extensions (stopgap bills) until it can complete and send all 12 appropriations bills to the president, usually in a massive omnibus spending package.
However, this year promises to be more dramatic with possibly the first government shutdown since Republicans and former President Clinton squared off in 1995. This could happen because congressional Democrats added $22 billion to President Bush's appropriations requests, and Bush insists he will not accept the additional spending. And though Speaker of the House Nancy Pelosi (D-Calif.) called the $22 billion a "relatively minor difference" and Senate Majority Leader Harry Reid (D-Nev.) similarly called it a "very small difference," House Minority Whip Roy Blunt (R-Mo.) predicted a government shutdown, saying: "It is inevitable."
NRCA conference
It is likely this budget battle between Democrats and President Bush will be happening while more than 200 NRCA members are in Washington, D.C., for NRCA's Fall Committee Meetings and Legislative Conference Oct. 16-19. There also might be veto fights taking place regarding the war in Iraq, the 2007 farm bill, and renewals of the No Child Left Behind Education Bill and State Child Health Insurance Program. But unless these bills contain industry-specific issues for NRCA members, the conference's main focus will be immigration.
When the Senate attempted to pass a comprehensive immigration reform bill earlier this year it had the president's full support but the administration also warned Congress it would initiate tougher enforcement policies should such legislation fail. Soon after the bill collapsed in June, the Department of Homeland Security (DHS) signaled it would finalize new regulations dictating how employers must respond to Social Security Administration (SSA) "no-match" letters, which SSA issues when W-2 forms do not match its records.
DHS first proposed the regulations in a June 14, 2006, Federal Register notice, and NRCA submitted comments to DHS criticizing the proposal on Aug. 14, 2006. Almost one year later, on Aug. 10, Commerce Secretary Carlos Gutierrez and Homeland Security Secretary Michael Chertoff announced multiple changes to immigration-related programs under the administration's purview—the most controversial being the final no-match letter regulations that were scheduled to go into effect Sept. 14.
The no-match letter regulations essentially are designed to pressure employers to terminate potentially illegal immigrant employees within 93 days of receiving a no-match letter.
The timeline begins when an employer receives such a letter, after which the employer has 30 days to check in-house records, make corrections and verify them with SSA. Also, the employee is to be notified within 30 days by the employer if the employer finds no discrepancies between SSA and in-house records. At that point, the employee has until 90 days after the employer received the letter to correct the error and, if necessary, an additional three days to fill out new paperwork and provide legitimate documentation. If this cannot be done, the employer must terminate the employee to avoid being legally liable under the new regulations.
Although SSA does not alert immigration authorities when it sends out no-match letters, employers who think they are in compliance with the law may discover employees presented seemingly valid documents. This will cause work force dislocation and "churning" throughout the economy—particularly in construction because employer liability can range from 2 percent higher civil fines to criminal penalties for serious violators should DHS investigate.
In its regulations, DHS provides examples of steps employers can take to secure a "safe harbor" from liability for unknowingly having hired unauthorized employees. These steps would shield employers from the newly expanded legal threshold of having "constructive knowledge" of such hires, but the steps could be burdensome for small businesses.
Also, immigration law experts scoff at being able to resolve disputes with SSA within 93 days. And they are skeptical of data quality in the electronic employment eligibility verification program E-Verify (formerly called Basic Pilot). Regardless, DHS suggests employers use E-Verify and ultimately will require its use by all federal contractors.
NRCA's Legislative Conference will include a briefing about the latest developments concerning the no-match regulations and the U.S. Chamber of Commerce's litigation program. The chamber's program will be conducted by the National Chamber Litigation Center with NRCA's support to repeal state and local anti-immigration laws that unfairly target employers. NRCA members will then visit with senators and congressmen regarding this issue and others and meet with White House officials the following day.
Tax issues
In addition to immigration, two other issues the conference will focus on involve taxes. Specifically, NRCA members will be able to discuss repealing the 3 percent withholding tax and shortening the depreciation schedule for commercial roof systems.
Slipped into the Tax Increase Prevention and Reconciliation Act of 2005 are provisions (Section 511) requiring federal, state and local government entities to withhold 3 percent of payments due to contractors each year starting in 2011. NRCA supports the Withholding Tax Relief Act of 2007, S. 777/H.R. 1023, to repeal Section 511.
Also, NRCA anticipates that when its conference takes place, the Roofing Energy Efficiency Tax Act (REETA) will have been introduced. REETA is the former Senate version of the Realistic Roofing Tax Treatment Act (R2T2) that would shorten the tax depreciation schedule for commercial roof systems from its current 39-year schedule to 20 years. But, as with R2T2, the shorter schedule would only apply to roof systems that comply with ASHRAE 90.1, "Energy Standard for Buildings Except Low-Rise Residential Buildings." This makes it an even more attractive amendment for energy legislation.
But with Democrats in the Senate and House of Representatives trying to forge comprehensive energy legislation from bills written in each chamber weeks ago, it might appear too late for REETA to gain traction. However, attempts by Reid and Pelosi to craft energy legislation that can muster the votes to pass in both chambers may fail because the House bill's proposed tax increases on oil producers are a problem for Senate Democrats from oil-producing states. And even if such legislation does make it through Congress, it is likely the president would veto it. So there could be more opportunities in this Congress for REETA, but should it not get added to an energy or tax bill during the next 12 months, it is important REETA be positioned for consideration in the next Congress and administration.
The next administration
The growing number of state presidential primaries and caucuses that will take place in the beginning of 2008 should give presumptive nominees for the major parties enough delegate strength to be declared winners by Feb. 5, 2008, the date to which Arkansas, California, New Jersey, New York and others have moved up their primaries.
Moving up primaries is a two-decades-old trend based on politicians in other states who were unhappy with the early roles Iowa and New Hampshire play in choosing nominees. But doing so may cause Iowa and New Hampshire to push up their dates, as well; Iowa's caucuses could now be held Jan. 1, 2008, and New Hampshire's primary could be held Jan. 8. Also, the South Carolina Republican Party has rescheduled its primary for Jan. 19, and Florida's Republican Party has rescheduled for Jan. 29.
And based on the trading market, it seems clear who is slated to win the nominations. Intrade.com, an Irish company owned and operated by Trade Exchange Network Ltd., offers presidential candidate trading values. Sen. Hillary Clinton's (D-N.Y.) trade value is the most expensive followed by former New York City Mayor Rudy Giuliani's (R) and then all other candidates.
The Iowa Electronic Markets (IEM), the University of Iowa's political stock market, is offering similar odds. IEM works like a futures market, and traders often are finance and accounting students throughout the U.S. IEM has Republican candidates more closely bunched than Intrade, but IEM and Intrade have developed good reputations for predicting election outcomes and show Clinton and Giuliani leading their respective fields.
The next Congress
Odds-makers and political pundits overwhelmingly predict Democrats will maintain control of the House in the 2008 elections. Although the National Republican Congressional Committee has had success recruiting top-notch challengers to incumbent Democrats in several congressional districts, retirements such as that of former Speaker Dennis Hastert (R-Ill.) will make it difficult for Republicans to gain seats.
This is in spite of the fact that the 110th Congress, led by Democrats, has received some of the lowest approval ratings in the history of modern polling. But the Republican "brand" remains tattered from the 2006 election, and the party does not appear to be in a position to take advantage of congressional Democrats' low ratings. House Republicans must rehabilitate themselves with independent voters who abandoned them in droves in 2006 to salvage any chance of gaining House seats in 2008.
For Senate Republicans, the goal is to limit losses—of the 34 seats to be filled on Nov. 4, 2008, Republicans are defending 22 and Democrats are defending 12. Experts believe the most vulnerable Republican seats are Colorado, Minnesota and New Hampshire, but Maine, North Carolina and Oregon also make some lists. Plus, Alaska and New Mexico could be in play because of individual controversies specific to each state's longtime incumbent. And with Virginia's incumbent Sen. John Warner (R) opting to retire, Democrats have a good chance to pick up that seat, as well.
For now, Senate Democrats only must worry about Louisiana and South Dakota and are poised to add to their numbers. But with Senate Republicans holding 49 seats, their numbers could slide close to the minimum needed to filibuster—41.
On the agenda
The window of opportunity for legislation to pass in this Congress is expected to close Feb. 5, 2008, when presidential nominees for the Democrats and Republicans will emerge and take over the agenda for campaign purposes. NRCA's Legislative Conference will focus on immigration and tax issues to spur congressional action during the next few months and position NRCA's agenda for the next Congress and administration.
Craig S. Brightup is NRCA's vice president of government relations.
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