OCTOBER NIADA Government Affairs Report

OCTOBER Government Affairs Report from

 Brett Scott, NIADA, Vice President, Government Affairs

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September ended with our first National Policy Conference since 2019. It was a great hit, and we were able to bring our concerns to the ears of the decision makers. With September ending, October followed and all focus was on elections. With Election Day less than two weeks away and early voting having already started in a number of states, it’s a good time to analyze the likely outcome of the election and the resulting policy implications. This report will focus on just that, with some sprinkling of GR activity. Prior to 2008, our country had experienced a steady 3% GDP real growth for many years. Since then we’ve been hovering around a steady 2% GDP real growth. There have been eight national elections during this period, and the party in power has changed in seven out of eight of those elections. When we swing from party to party as we have been doing over the last decade plus, the result is that our policies also swing back and forth like a pendulum creating uncertainty for business and taxpayers.

As we know, midterms are usually a crystal ball on the then current president’s popularity, which at this point does not bode well for President Biden or his party. On average, in recent decades, the party in power loses an average of twenty-nine seats in the House due to the midterms. This year the Republicans only need to gain six seats to take control of the majority in the House. Unlike the House, over this same period, the party in power has only lost, on average, just one seat in the Senate. Only Franklin D. Roosevelt and George W. Bush saw their parties gain seats in the House during the midterm elections, and each were dealing with extraordinary situations.

For those of you who care about the odds – the most recent betting models show the odds of Republicans gaining control of the House and Senate at being just slightly over 50% with the odds of Republicans controlling the House and the Democrats controlling the Senate hovering around 40%. An interesting rumor is that Senator Mitt Romney (R-UT) has chosen not to endorse Senator Mike Lee (R-UT) in the hope that the independent Evan McMullin will win allowing the two of them to control the Senate in the same way that Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have done the last 2 years.

Different factors favor one party over the other – for instance, increased gas prices favor the Republicans while decreased gas prices favor the Democrats. The Supreme Court’s decision overturning Roe v. Wade has led to what looks to be the largest voter mobilization of women under the age of 40 in our history. Recent polls have identified inflation, jobs, and the economy and immigration as the most important issues to voters going in this election. These issues tend to favor Republicans. Thus, the voters are seeing that their most important issues are in line with what is perceived to be Republican bread and butter issues.

As we saw during the 2006 presidential election, anything can happen that can significantly change the election. So, if gas prices go down, or President Biden’s approval rating goes up (somewhat unlikely at this point) or former President Trump is indicted (also unlikely at least before the election) or the pollsters have somehow ignored or failed to account for that massive group of new women voters under 40, or one of the Republican or Democrat contenders for the Senate makes a major mistake, then all of the above can change. As of now, though, the polls suggest that we are heading for a Republican takeover of the House and potentially the Senate.

Adding to this mix is that the vote in Pennsylvania will take a long time to be counted so it is unlikely we will know who will replace Senator Toomey (R-PA) on election night. In Georgia, if neither candidate gets over 50% of the votes on November 8, which is quite possible, there will be a runoff on December 6^th between the two top vote-getters – meaning it is conceivable we won’t know who controls the Senate until December.

In the unlikely event that there is a clean sweep by the Democrats, we would see a big focus on the childcare credit, healthcare (expanded Medicaid), clean energy, and infrastructure. These policies would require additional taxes to fund them. If the Republicans control the Senate (but not with 60 Senators) and the House, President Biden still remains with veto power.

If we end up with a Republican House and a Democratic Senate, then we’ll see a lot of gridlock, but an active Lame Duck session is still needed to address some very important items such as government funding. Current funding runs out on December 16^th, and Congress is faced with three options – continue existing funding levels into the New Year with another Continuing Resolution (most likely), pass what’s called an Omnibus that includes new, updated funding levels for all the parts of government that remain unfunded (less likely), or a combination of the two (somewhat likely).

There’s also the National Defense Authorization Act (NDAA), which the business community will oppose if it continues to include the harmful ENABLERS Act that was snuck into the House bill at the last minute. The NDAA has been adopted every year for the past zillion years or so, rain or shine, so expect this to be on the floor in November.

All of this is still on the docket and the Lame Duck session, might not be as lame as expected. More details on past legislation can be found below.

Inflation Reduction Act: Senator Manchin (D-WV) and Senator Schumer (D-NY) had come to an agreement on a climate bill, titling it the Inflation Reduction Act (IRA). 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 IRA 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.

U.S. Chip Production

Current: CHIPS Act was signed into law before Members of Congress left for the long August recess.

Past Summary: 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.

Auto Caucuses

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^th, 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.

FTC Issues:

Update: NIADA and other leading industry associations submitted comments outlining concerns this proposed rule would have on the auto industry. In addition, there currently is a letter circling through Congress asking the FTC to extend the comment period for this proposed rule.

Past Summary: Extension was denied by the Federal Trade Commission (FTC), and NIADA plans to submit comments by the original deadline of September 12^th.

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.

CFPB Issues

In September 2021, the CFPB issued a subprime auto lending report. On February 24^th, it published an auto lending disclosure blog. On February 28^th, it issued an illegal repossession compliance bulletin. On March 16^th, 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: During the National Policy Conference, there were rumors flying that a Senate companion bill will be introduced in the coming weeks by Senator Klobuchar (D-MN) but nothing has been released as of this writing.

Past Summary: House version- 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.