TO: NIADA Board Members
FROM: Brett Scott, Vice President, Government Affairs
SUBJECT: Government Affairs Report
As many left Washington, DC expecting the sleeping giant to nap, some Senators were having backdoor conversations trying to hammer out a progressive climate package that would address some of the moderate and progressive Democrats wish lists. Quickly following the fast passage of the CHIPS Act, Sen. Manchin (D-WV) and Sen. Schumer (D-NY) jointly put out a press releases announcing they had come to an agreement on a climate bill, titling it the “Inflation Reduction Act.” Within this bill includes:
- Creation of a 15% corporate minimum tax rate:Corporations with at least $1 billion in income will have a new tax rate of 15%. Taxes on individuals and households won’t be increased. Stock buybacks by corporations will face a 1% excise tax.
- Prescription drug price reform:One of the most significant provisions of the Inflation Reduction Act will allow Medicare to negotiate the price of certain prescription drugs, bringing down the price beneficiaries will pay for their medications. Medicare recipients will have a $2,000 cap on annual out-of-pocket prescription drug costs, starting in 2025.
- IRS tax enforcement: The IRS has been sounding the alarm for years about being underfunded and being unable to deliver on its duties. The bill invests $80 billion in the nation’s tax agency over the next 10 years.
- Affordable Care Act (ACA) subsidy extension:Currently, medical insurance premiums under the ACA are subsidized by the federal government to lower premiums. These subsidies, which were scheduled to expire at the end of this year, will be extended through 2025.
- Energy security and climate change investments: The bill includes numerous investments in climate protection, including tax credits for households to offset energy costs, investments in clean energy production, and tax credits aimed at reducing carbon emissions.
More specific to the auto industry, the bill includes both new and used car incentives for electric vehicles. For consumers that purchase a new elective vehicle, a $7,500 tax credit designed to fight climate change is included, but the new law carries certain conditions. The big change for new vehicles purchased after August 16, 2022, final assembly must take place in North America.
For the independent car market, the Inflation Reduction Act allows for tax credits of up to $4,000 or 30% of the vehicle sale price (whichever is lower) for pre-owned electric vehicles. In addition, the income limit for single filers is $75,000 or $150,000 for joint filers and the sale price must be less than $25,000 and weigh less than 14,000 pounds, leaving not much wiggle room for many used EV’s able meet these requirements.
With such a quick rush to pass the Inflation Reduction Act, Democrats seemed to have a new breath of life. The President saw his approval ratings jump, many leaning Republican House races were quickly switched to lean Democrat or in some cases turn to most-likely Democrat. A similar trend in the Senate with Wisconsin and Pennsylvania leaning more blue than red followed suit. With August recess coming to an end, all that is really left to hammer out are the twelve (12) Appropriation bills that have passed the House, but are now in the hands of the Senate. For more context, the Senate has yet to even take any of the House bills through committee so with the government shutdown looming, I would expect a Continuing Resolution to be done and members can rush back to their districts and focus on campaigning.
As noted in my previous reports, Senate and House negotiators finalized a bipartisan gun safety bill to take firearms away from dangerous people and provide billions of dollars in new mental health funding. The legislation would invest more than $7 billion in mental health services, boost funding for school-based mental health and support services, and invest in programs to strengthen safety measures around primary and secondary schools.
In addition, it would enhance the background check process for gun buyers ages 18 to 21 by allowing more access to juvenile crime records, clarify the definition of firearms dealers to include people who sell a large number of guns without a federal firearms license, and crack down on illegal gun trafficking.
With only a few days left before the long August recess, there still remains a packed schedule of issues to be covered. Once August recess ends, members come back to figuring out how to fund the government after September 30th and if a potential spending bill has any legs. Senate Majority Leader Chuck Schumer (D-NY) is trying to make all the preparations he can should he and Manchin come to an agreement before the end of September.
Those weeks could give Democrats a huge opportunity to add another accomplishment before the November midterms. And they need it. Polls show Biden’s approval rating is around 40%, endangering Democrats’ slim Senate majority. If all stars align, passing Manchin’s spending bill would offer a jolt come election time to four Democratic Senators in New Hampshire, Arizona, Nevada, and Georgia, where voters would be more likely to support the incumbents if such a bill passes.
Political Action Committee (PAC) Update
The annual PAC Cup competition officially kicked off for 2022 with a reception during the NIADA Convention and Expo at the MGM Grand in Las Vegas.
The Cup will be awarded to the region that contributes the most to the PAC Fund at the National Policy Conference (NPC) in Washington D.C.
NIADA PAC’s goal is to raise $150,000 this year, and we are over two-thirds of the way there. This year the PAC has raised $$106,00.
Every dollar counts toward that goal and toward the regional PAC Cup competition. At the Annual PAC Cup dinner at this year’s National Policy Conference (NPC), the four regions will be competing to see who raises the most money. You can donate today or at the Annual PAC Cup dinner. Either way it counts toward your region. See who is currently in the lead for the PAC Cup today. Donate by visiting www.niada.com/pac.
2022 Election Season is in Full Swing
Election season is up with primaries and special elections changing the makeup of the electoral map. Recent elections of note:
On July 19, Maryland held its primary elections for governor. The Republican primary for governor saw hand-picked successor of popular outgoing Republican Governor Larry Hogan, Kelly Schulz, against Trump-back Republican Delegate Dan Cox. Cox opened a wide lead over Schulz before Maryland election officials started counting the 200,000 mail-in ballots, of which only 38,000 are Republican. That wide lead was 56% to 40%.
On the Democratic side, Wes Moore comfortably led a crowded field of Democrats. The three leading Democratic candidates were political newcomer author and nonprofit CEO Wes Moore with just under 33.5% of the vote; former U.S. Labor Secretary and Democratic Party head Tom Perez with 28.8% of the vote; and longtime Maryland Comptroller Peter Franchot trailing at about 21.6% of the vote.
Democrats are hoping to retake the governor’s office after eight years of Republican Larry Hogan’s Administration, a moderate Republican who is among the nation’s most popular governors. Hogan is prohibited by state law from seeking a third term.
Past Elections of Interest:
Congressman Henry Cuellar (D-TX-28) Ousts Challenger in Primary Runoff
Cuellar narrowly defeated attorney Jessica Cisneros in a contentious primary runoff held on May 24. He won the runoff by 289 votes. Cuellar had the support of House Speaker Nancy Pelosi while Cisneros had the support of a new generation of more liberal Democrats, including Congresswoman Alexandria Ocasio-Cortez (D-NY-14). Cuellar’s victory is a blow to progressives. The general election in November will be competitive especially with the strong Republican wave predicted this year. Cuellar will now face Republican candidate Cassy Garcia, a former deputy state director for Senator Ted Cruz (R-TX).
Newest Congresswoman Flips Historically Democratic District
The Texas 34th Congressional District will be represented by a Republican for the first time following a special election held in June. Mayra Flores, who bested her Democrat competitor in a 51%-43% vote and who is the first Mexican American elected to Congress, will serve the 34th Congressional District until January 2023. She will fill the remaining term of Congressman Filemon Vela who resigned in March to work for the lobbying firm Akin Gump. She will run again in the general election in November in the newly redrawn 34th district against Democratic nominee Congressman Vicente Gonzalez (D-TX-15). While President Joe Biden won the 34th district by 4 percentage points, redistricting made the district friendlier to Democrats.
Freshman Member of Congress Defeats Congressional Veteran in Primary
Freshman Republican Congresswoman Mary Miller (R-IL-15), who had former President Donald Trump’s endorsement, defeated five-term Congressman Rodney Davis (R-IL-13) for their party’s nomination in the 15th District. Miller had 58% of the vote to Davis’ 42%. This race was one of the most hotly contested and nationally watched congressional races. Political analysts state that the newly redrawn district was looking for a pro-Trump candidate which voted 68% for Trump in 2020.
Comeback in Runoff After Second Place Finish in Runoff
Congressman Michael Guest (R-MI-3) made a comeback to secure the Republican nomination for the November elections. Navy veteran Michael Cassidy questioned Guest’s conservative credentials and commitment to former President Donald Trump. Guest was one of 35 House Republicans who voted last year for the creation of an independent commission to investigate the January 6, 2021, riot at the U.S. Capitol. Guest benefited from a surge of support from his colleagues in Washington after he finished almost 300 votes behind Cassidy in the primary.
Past Summary: Most recently, as fighting intensifies in Ukraine, President Biden said Russia’s attacks in Donbas require different types of weapons from the U.S. and its allies. In a renewed effort to support Ukraine’s military, President Biden announced the U.S. is providing another $800 million to help Ukrainian forces fight in the east of the Donbas region, where fighting has recently intensified. The new package includes heavy artillery, ammunition, and tactical drones.
U.S. Chip Production
Current: Conversations are still ongoing as members continue to negotiate final bill language during conference with hopeful passage in both Houses by first week of August.
Past Summary: NIADA in coordination with the U.S. Chamber of Commerce signed onto a letter supporting the Bipartisan Innovation Act to fund the Creating Helpful Incentives for the Production of Semiconductors (CHIPS) for America Act and Enhanced Facilitating American-Built Semiconductors (FABS) Act. Multiple industries across various sectors also signed onto the letter. The letter outlined the importance of semiconductors to nearly every sector of the economy, including aerospace, automobiles, communications, clean energy, information technology, and medical devices. Due to demand not meeting the supply from COVID-19, this has created a global chip shortage and resulted in lost growth and jobs, in turn underscoring the need for increased domestic manufacturing capacity.
NIADA will continue to engage with the U.S. Chamber on addressing this on-going issue as it continues to affect the automobile industry.
The Senate bill is 160 pages; the House bill 1,200 pages.
EV Charging Stations State Funding
The Department of Transportation released their guidelines for States to FHWA/DOE and announced the allocation of $615 million to the states for EV charging stations. The BIF provides $5 billion over five fiscal years for such funding. This is the first installment. States are required to development EV charging stations deployment plans by August 1 for final FHWA/DOE approval by September 30. We are assessing the approach regarding member interest in the program.
Current: Members of the Auto Caucus postponed the roundtable with no set date for a reschedule.
Past Summary: NIADA has been in contact with member staff on potentially participating in a roundtable discussion focusing on auto technician shortages, differences between working on traditional gas vehicles vs EVs, and if that plays a role in the shortages. And lastly, how first responders need to approach auto accidents differently when EVs are involved. No date has been scheduled as of late.
On January 19, the House Auto Caucus hosted a roundtable with labor, manufacturing, and trade experts to discuss semiconductor availability. Attendees included Josh Nassar, Legislative Director for the United Autoworkers; Shilpan Amin, Vice President of Global Purchasing and Supply Chain for General Motors; David Isaas, Vice President of Government Affairs for the Semiconductor Industry Association; and, Alexander Perkins, Principal for Mehlman, Castagnetti, Rosen & Thomas. Congresswoman Marcy Kaptur (D-OH-9) and Congressman Mike Kelly (R-PA-16) are co-chairs of the House Auto Caucus. Senator Rob Portman (R-OH) and Senator Sherrod Brown (D-OH) are co-chairs of the Senate Auto Caucus. No action in the Senate to date.
Update: Extension was denied by the Federal Trade Commission (FTC) last week, and NIADA plans to submit comments by the original deadline of September 12th.
Past Summary: NIADA in coordination with NADA, AFSA, GAPA, AIADA, and other industry stakeholders submitted comments requesting an extension on the comment period from 60 to 120 days. NIADA’s letter outlined the large amount of data and leg work needed to address all of the requests in the proposed rule. More details to come as the FTC reviews all comments submitted. comment period.
Past Summary: The FTC issued a proposed rule to ban junk fees and bait-and-switch advertising tactics that can plague consumers throughout the car-buying experience. As auto prices surge, the Commission is seeking to eliminate the tricks and traps that make it hard or impossible to comparison shop or leave consumers saddled with thousands of dollars in unwanted junk charges. The proposed rule would protect consumers and honest dealers by making the car-buying process clearer and more competitive. It would also allow the Commission to recover money when consumers are misled or charged without their consent.
The notice includes questions for public comment to inform the Commission’s decision-making on the proposal. These include questions about provisions in the proposed rule and whether other provisions should or should not be included in the rule, as well as questions related to the costs and benefits to consumers and auto dealers of the proposed rule. In addition, the notice includes a preliminary regulatory analysis estimating that the net economic benefit of the rule would be more than $29 billion over ten years. After the Commission reviews the comments received, it will decide whether to proceed with issuance of a final rule. NIADA will be submitting comments to this proposed rule and will keep members aware of the progress.
In September 2021, the CFPB issued a subprime auto lending report. On February 24, it published an auto lending disclosure blog. On February 28, it issued an illegal repossession compliance bulletin. On March 16, the CFPB announced that it will be targeting unfair discrimination in consumer finance. The CFPB will examine for discrimination in all consumer finance markets, including credit, servicing, collections, consumer reporting, payments, remittances, and deposits. CFPB examiners will require supervised companies to show their processes for assessing risks and discriminatory outcomes, including documentation of customer demographics and the impact of products and fees on different demographic groups. The CFPB will look at how companies test and monitor their decision-making processes for unfair discrimination, as well as discrimination under ECOA.
Update: NIADA and CFPB staff held a successful phone call to discuss multiple issues facing the industry. More specifically, NIADA members discussed how dealers have handled the COVID-19 pandemic, increased car prices, and how dealers are helping consumers during these difficult times. CFPB staff were appreciative of the feedback and look to continue having an open dialogue.
H.R. 6394 PART Act
Update: Multiple new Members of Congress have become co-sponsors of this particular bill as NIADA continues to lobby on the importance of this legislation to Members of Congress.
Past Summary: Congressman Jim Baird (R-IN-4) introduced this bill that focuses on the current rise in catalytic converter thefts. NIADA was in close communication with the author’s staff on pushing this out to industry and most recently have taken the lead with NADA on sending a letter to Energy & Commerce Chairman Frank Pallone (D-NJ-6) and Ranking Chairwoman Cathy McMorris Rodgers (R-WA-5) supporting the legislation. NIADA and NADA will continue to have discussions with Congressman Baird’s staff and committee staff to explore multiple options on this important issue.