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Bush, Kerry Spar Over Industry Issues

Tue September 07, 2004 - National Edition
Pete Sigmund



How do the presidential candidates stand on construction-industry issues?

Construction Equipment Guide (CEG) posed this question to close observers of the election race from national construction organizations.

Specifically, what are the positions of President George W. Bush and Sen. John F. Kerry on highway spending, increasing the federal tax on motor fuels, permanently abolishing the Estate Tax, allowing greater equipment-depreciation writeoffs, protecting the environment, and cutting the equipment trade deficit?

Observers identified differences on issues based on the Bush Administration’s legislation or proposals for the future, Senator Kerry’s voting record in the U.S. Senate and Kerry’s current proposals. (A comparison of voting records, of course, is not possible because Bush has not served in Congress.)

Highway Funding

The Bush Administration has thus far held the line on its proposed $256-billion authorization of a new six-year highway and mass transit bill, which it calls SAFETEA (Safe, Accountable, Flexible and Efficient Transportation Equity Act).

In written replies to questions from the Auto Club of Southern California, Bush said, “Under SAFETEA, highway funding will grow by 21 percent over the levels provided in TEA-21 [the Transportation Equity Act for the 21st Century], the previous six-year bill … We must address the transportation issues facing America with smart, effective legislation that will enhance mobility and increase safety without raising taxes on consumers. SAFETEA would meet these needs by providing over $212 billion in funding for highway and safety programs and nearly $44 billion in funding for public transportation programs from fiscal year 2004 through fiscal year 2009.”

Sen. Kerry supported successful passage of a higher $318-billion six-year highway authorization bill in the Senate, though he was absent campaigning at the time of the actual vote. (House proposals originally discussed an even-higher amount — $375 billion.)

In his written replies to the same questions, Kerry said, “The Senate passed a highway and transit spending bill this year that addresses the funding problem, but unfortunately the President has promised not to sign it. … I’m disappointed that the bill is stuck in Congress because it would address infrastructure problems all over the country and create hundreds of thousands of jobs in the process. I think that, in general, not enough attention has been paid to the transportation system over the past few years, and I intend to change that when I am president.”

Observers told CEG that it now seems more likely that the House and Senate, when Congress reconvenes this month, will agree on a guaranteed funding level of at least $284 billion. They said that Bush, who had been reluctant to go above $256 billion, “signaled his support for $284 billion just before the congressional recess began, and this equates to about $86 billion above the guaranteed funding levels of TEA-21.”

“The $256-billion measure was basically dead on arrival in Congress,” said Matt Jeanneret, a spokesperson for the American Road and Transportation Builders Association (ARTBA) in Washington, D.C. “The negotiations in conference committee between the House and Senate are looking at anywhere between $290 billion and $300 billion. The $256 billion doesn’t even come close to meeting the $375-billion in highway needs identified by the Department of Transportation. That being said, this president in the last several years has signed appropriations bills containing record levels of investment for highways and transit.”

So both Bush and Kerry support more infrastructure spending, with Kerry favoring a higher level in voicing support for the Senate Bill.

“Transportation is one of those issues that has overwhelming bipartisan support because both sides realize its importance to our economy and quality of life,” Jeanneret said. “In fact, since Republicans control the Congress, conservative Republicans have been leading the charge for increasing investment significantly. I think the Administration’s bill was an attempt to make a political statement in an election year. I think it was well intentioned but misguided. The growing highway and transit needs in this country are screaming for more than that. We want to see the bill done right. It’s unclear whether that will happen this year [after Congress reconvenes in September] or next year.”

Jeanneret cautioned that ARTBA “has not endorsed a candidate and won’t be endorsing a candidate in the coming election; we really leave it up to our membership to look at the candidates’ public statements, examine their records, and go to the respective Web sites to help decide which way to vote.

“I’m not sure you get a clear picture one way or the other on which candidate will be better for transportation investment,” he added.

Increasing the Gas Tax

Both Bush and Kerry oppose increasing the federal tax on gasoline.

In other written replies to the auto club’s questions, Bush said he “will fight any attempt to do so [raise the tax].”

Kerry wrote: “I oppose increasing the gas tax and believe we can make important investments in America without increasing the gas tax.

Both Bush and Kerry appear to oppose proposals to suspend or repeal the tax on motor fuels. They back a user-fee-supported funding system. Kerry opposed a proposal that would have given highway programs back to the states. Bush signed legislation last year reauthorizing and increasing the nation’s airport construction program, a bill which Kerry voted for.

Kerry had expressed support in the early 1990s for the idea of a 50-cent increase in the gas tax. This was in the context of energy legislation to reduce demand, and dependence on foreign oil, rather than for transportation legislation.

ARTBA has advocated a five-cent increase in the motor fuels tax to fund a $375-billion program. The Associated General Contractors of America (AGC) advocates fully taxing ethanol at the same rate as gas. AGC said this is necessary to avoid a shortfall in the Highway Trust Fund as outlays reach record levels and fuel usage, and therefore gas tax revenue, decline.

The ’Death Tax’

The differences are more marked on the issue of permanently repealing the Estate Tax, often called the “Death Tax.”

The White House has been promoting permanent repeal of the tax. A modified version of repeal was a keystone of the Administration’s Economic Growth and Tax Relief Reconciliation Act, passed in 2001. Under this present law, the tax would phase out of existence in 2010, but would spring back to life in 2011.

In campaign speeches, Bush advocates permanently repealing the Estate Tax.

Construction-industry organizations told CEG that repeal is a very big issue for them because the tax is levied on money that has already been taxed and makes it harder to keep dealer and contractor businesses in the family.

Kerry voted against the 2001 tax relief bills that began phasing out the tax. Industry organizations don’t regard him as a strong supporter of permanent repeal.

“I think Kerry’s action reflected his general opposition to the Administration’s program of large tax cuts,” said one observer, who did not wish to be identified.

Democrats have criticized repeal as a giveaway to the wealthy, saying it applies only to the richest 2 percent of Americans who pay the tax.

Under the 2001 law, the “lifetime exclusion” — the amount an individual can pass on, free of estate tax — increases from $1 million in 2003 to $1.5 million in 2004 and 2005, $2 million for 2006 through 2008, and $3.5 million in 2009, with no Estate Tax in 2010.

Top estate tax rates decline to 48 percent in 2004, 47 percent in 2005, 46 percent in 2006, and 45 percent in 2007, 2008 and 2009.

Depreciation Bonus

The 2002 Job Creation and Worker Assistance Act created a “depreciation bonus” allowing a tax deduction of 30 percent of the cost of new equipment under certain time provisions. The 2003 Jobs and Growth Act increased this deduction, under specified conditions, to 50 percent. The bonus is due to expire at the end of 2004.

The construction industry strongly backs the deduction as a big incentive for people to purchase equipment. If a contractor purchases a $100,000 excavator this year, for instance, he or she can deduct $50,000.

Sen. Kerry voted for the 2002 tax law, which created the bonus, but against the 2003 act that expanded it and contained many other tax cuts. Advocates strongly pushed the legislation on Capitol Hill and it was signed into law by President Bush.

Trade

The candidates accentuate different aspects of the world trade picture.

Kerry said he will “cut taxes for businesses that create jobs here in America instead of moving them overseas” and said he “will also stand up for workers by enforcing our trade agreements.”

The Kerry Web site said: “We’re stronger when we create good-paying jobs here, not ship them overseas.”

Kerry supports authorizing further funds for trade promotion.

The Bush Web site warns of “economic isolationism,” adding:

“Open trade with the world encourages foreign companies to locate their plants here and hire American workers. Foreign firms provide paychecks to 6.4-million Americans.”

The Web site also says that “Kerry’s call for reviewing trade agreements … and for imposing unilateral tariffs could spark a trade war that jeopardizes U.S. jobs.”

Bush likewise supports trade promotion.

Commented Nick Yaksich, vice president, government affairs, at the Washington, D.C., office of the Association of Equipment Manufacturers (AEM):

“For manufacturers, a strong domestic market goes hand-in-hand with growing international opportunities. The next president will face a critical trade year as Congress will consider extending trade promotion authority and the U.S. role in the World Trade Organization. The Administration needs to take a leadership role in advocating free trade and be steadfast in ensuring that barriers are removed to level the playing field for U.S. manufacturers to compete in the international marketplace.”

Environmental Projects

Both candidates support environmental cleanups.

The Kerry Web site said Kerry will plug loopholes in the Clean Air Act, “take aggressive action to stop acid rain, and use innovative, job-creating programs to reduce mercury emissions and other emissions that contribute to global warming.” It says he will “revitalize contaminated industrial sites, get toxins out of communities, guarantee our children access to clean, safe parks and baseball fields, and take on traffic congestion and sprawl” while also implementing a “Restore America’s Waters” campaign.

The Bush Web site says the Administration’s Clear Skies legislation will reduce harmful emissions from power plants by approximately 70 percent over the next 15 years. Bush has pledged a national goal of creating, improving and protecting at least 3-million wetland acres over the next five years. He also has signed legislation accelerating cleanup of abandoned industrial sites, and helping restore forests and rangelands to health.