Short-Term Funding Extends Federal Operations Until December 20
As expected, the House of Representatives passed a short-term continuing resolution Thursday evening by a vote of 341-82 and sent it to the Senate, which followed suit and approved the measure by a vote of 78-18. The CR funds federal government operations through December 20, allowing Congress time following the election on November 5 to forge a Fiscal Year 2025 budget deal. The measure is a relatively “clean” CR, meaning policy riders that had accompanied earlier versions were ultimately dropped. It does include $231 million for the Secret Service to bolster its capabilities. The final version omitted supplemental money for FEMA’s disaster relief fund to cover outlays that may be necessary through the hurricane season. With the timing of Helene, this move left many in both parties a bit frustrated. The bottom line is that the President will sign the measure before government runs out of funding on Monday, September 30.
ABMA Urges Protection for S-Corp Deductions as 2025 Tax Cliff Approaches
Senator Ron Wyden (D-OR), Chairman of the Senate Finance Committee–the tax-writing panel in the upper chamber–said this week that revising and updating tax law governing pass-through entities like S-Corporations and partnerships should be a priority next year when Congress debates business tax benefit extensions. Chairman Wyden has long been vocal in his suspicion of pass-throughs and partnerships as a tax avoidance channel for upper-income taxpayers. In 2021, he unveiled a legislative proposal to close what he and his team on the committee deemed “loopholes” in pass-through tax law that should be closed.
Currently, pass-through business structures comprise 95 percent of all U.S. businesses and 62 percent of private sector workers. The S-Corporation structure is popular in the LBM sector. ABMA will be submitting comments to the House Ways & Means Committee’s Main Street Tax Team—one of ten teams established by House Ways & Means Committee Chairman Jason Smith (R-MO) to identify policy solutions to the upcoming 2025 tax cliff, when most of the Tax Cuts and Jobs Act (TCJA) tax benefits expire. One of these is the Sec. 199A 20 percent deduction for S-corporations and other pass-through business structures. Without Congressional action, that deduction will lapse at the end of next year. ABMA will emphasize the prevalence of pass-throughs in our sector and how critical the Sec. 199A deduction is for small and medium-sized Main Street businesses. Rep. Lloyd Smucker (R-PA) chairs this tax team. He is also the sponsor of House legislation (H.R. 4721) to make the Sec. 199A deduction permanent. ABMA signed onto this letter when the bill was introduced.
In another tax development this week, Senate Democrat staff familiar with Senator Wyden’s plans indicated that Senate Democrats intend to have a tax package reflecting Kamala Harris’s priorities ready on “day one” of a Harris Presidency. The goal is to have a jump start on negotiations over tax policy in the new Congress with a new President. Specifics are sparse at this point, but ABMA will be meeting with key staff in the coming weeks to ascertain specific areas of tax policy that will be prioritized in the package.
House Moves to Overturn EPA’s Tightened Standards
Last week, the House Energy and Commerce Committee reported several energy and environmental measures, including a resolution (H.J. Res. 117) to overturn EPA’s recent tightening of the particulate matter (PM) standard. Sponsored by Rep. Rick Allen (R-GA), the Congressional Review Act (CRA) resolution would nullify EPA’s move to lower the National Ambient Air Quality Standard for PM 2.5 from 12 to 9 micrograms per cubic meter. Finalization of this new standard has prompted concerns that it will stifle economic growth as large swaths of the country will now be at or near nonattainment for the pollutant.
In a similar move, the Committee approved H.J. Res. 133, another CRA resolution to overturn the EPA’s greenhouse gas emissions standards for heavy-duty vehicles.
Committee action on these two proposals is more of a messaging exercise as theses CRAs would not be signed by the President, but the development is noteworthy, nonetheless.
Farm Bill Stalemate Continues with Key LBM Provisions in the Balance
ABMA staff met with Majority Staff on the Senate Agriculture, Nutrition and Forestry Committee as well as Majority Staff of the House Agriculture Committee to discuss the status of Farm Bill reauthorization efforts and several priority items related to the building products sector. Senate Chairwoman Debbie Stabenow remains committed to passing a bill in the Lame Duck session of Congress following the election, but Democrats and Republicans have not agreed to spending levels on food assistance programs in the bill. Until that issue is resolved, negotiations on other aspects of the comprehensive Farm Bill are moot. But staff reiterated their strong support for increased funding for wood building products programs in current law. In the event that a bill does not move in the Lame Duck, Senator Stabenow is retiring and her successor as either Chair or Ranking Member (depending on election outcome and balance of power in the Senate) will be Senator Amy Klobuchar (D-MN)—a longtime supporter of the forest products/LBM sector.
In the House, Majority staff report that Chairman GT Thompson (R-PA) is energized about finalizing negotiations in the Lame Duck session so that Farm Policy will have some certainty headed into the new year and a new Congress. Again, the House Committee-passed bill has several favorable provisions promoting wood building products. Staff indicated that the staff directors of the Chairs and Ranking Members of both committees are talking regularly and committed to negotiating over the October recess leading up to the election.
In another sign that the appetite is there to get a deal done this year, the New Democrat Coalition, a moderate Democrat group in the House, wrote to House and Senate leadership Wednesday to urge passage of a new Farm Bill in the Lame Duck. “As New Dems, we are fully committed to working in a bipartisan fashion and finding a pragmatic path forward,” the Democratic lawmakers wrote. “By building upon the existing efforts throughout this Congress, we believe that there is a way forward to get legislation to the President’s desk before the end of the year.” House Republicans are also circulating a draft letter for signatures identifying the Farm Bill as “a ‘must pass’ item” this year.
New EU Tade Rules Jeopardize U.S. Wood Exports
A relatively little known, but draconian, mandate was enacted in the EU that threatens to preclude any wood product made in the U.S. from being sold into the EU market after December 30 of this year. Known as the European Union Deforestation Regulation (EUDR), the law requires wood product manufacturers (and manufacturers of other commodities like pulp and paper, rubber, soy, palm oil, beef, cattle, cocoa, and coffee) to provide exact geolocation data indicating the precise area in which trees were harvested to produce the product. No U.S. producer can meet this level of tracing granularity, and trade groups have been sounding the alarm for months.
Numerous Congressional letters have been sent to U.S. Trade Representative Tai, urging her and her team to work with her EU counterparts to head off any trade disruptions that the EUDR would certainly cause if allowed to take effect next year. Earlier this week, this letter signed by 73 Members of Congress was sent to President Biden urging him to intervene and press for a 2-year implementation delay. This issue is an upstream one for ABMA, but this is a top public policy priority for U.S. suppliers of wood building products.
Biden Administration Faces Pressure to Intervene on Impending Port Strikes
We are now just days away from all of the ports along the East and Gulf Coasts shutting down due to a labor dispute. This week, a letter signed by nearly 180 trade associations was sent to President Biden urging him and his Administration to intervene. In addition, an agricultural-focused letter was also sent this week. That letter is here:
So far, the President has signaled that he will not invoke the Taft-Hartley Act provision that would impose an 80-day cooling-off period and force employees to continue to work while negotiations proceed. We will keep you apprised of developments, but optimism is not running high that an agreement can be reached by the September 30 expiration of the labor contract.
