A time of high stakes

The upcoming 2020 elections have far-reaching implications for the roofing industry


As the 2020 elections approach in the midst of the global COVID-19 pandemic, a severe economic recession and the worst racial strife in decades, it is apparent much is at stake for the future of our democracy. Because government policies significantly affect roofing professionals’ abilities to start and grow businesses and contribute to their communities, it is more important than ever to be informed and engaged in the political process.

On Nov. 3, U.S. voters will decide whether we will have four more years of Republican President Donald Trump or turn to former Vice President Joe Biden, a Democrat, for leadership. Additionally, voters will choose candidates for the Senate and House of Representatives and, in doing so, ultimately decide whether one political party will have complete control of Congress.

As you weigh your decisions, I urge you to look carefully at candidates’ records and proposed policies and how they may affect your business and the roofing industry.

Current outlook

The COVID-19 pandemic and associated economic effects clearly are influencing the presidential race. Since fending off numerous other Democrats in the primary, Biden has built a stable lead over Trump in polling data on a national basis and in most “battleground” states in which the election will be decided in the Electoral College. Trump’s favorability rating of roughly 42%, as measured in the Real Clear Politics polling average in August, is historically low compared with previous incumbents who went on to win reelection.

However, most political analysts expect the race to tighten as the election approaches. Some of the things that might shift voters into Trump’s camp include an improving economy; the outlook for the pandemic; debate performances; and how the pandemic will affect voting and campaign activities. One factor in the incumbent’s favor is Republicans currently enjoy a slight structural advantage in the Electoral College where a candidate needs 270 electoral votes to win.

Biden’s substantial lead in the polls is not insurmountable. Nate Silver of FiveThirtyEight noted current modeling gives Biden a 71% chance of winning to Trump’s 29% but then pointed out this was the exact forecast his modeling had provided just days before Trump won the 2016 election. If there is one thing that has become apparent in recent years, it is politics is anything but conventional, so anything is possible.

Tax policy

Supporting federal tax policies that enable roofing industry employers to start and grow their businesses has long been a priority for NRCA. Sound tax policy is critically important to providing the capital needed to invest in new opportunities or sustain existing operations for businesses of all sizes and types. It is important to understand the Trump and Biden tax policies as well as the federal budgetary environment in which future decisions on tax policy will be made.

Although Trump has yet to propose a specific tax agenda for a potential second term, we can discern his preferences based on his record as president. The Tax Cut and Jobs Act of 2017, which was approved by Congress in December 2017 and took effect in 2018, is regarded as Trump’s most significant legislative accomplishment during his first term. The act reduced taxes by an estimated $1.5 trillion over 10 years, generally lowering tax rates for most taxpayers while eliminating many credits and deductions. NRCA supported the Tax Cut and Jobs Act and was especially pleased to see it included nonresidential roofing as qualifying property for expensing under Section 179 of the tax code. This allows small and midsized businesses to fully expense nonresidential roof system replacements rather than depreciating them over 39 years or as otherwise required under tax rules.

The central component of the Tax Cuts and Jobs Act was a reduction of the corporate tax rate from 35% to 21%. The law also lowered individual tax rates across the board with the top rate falling from 39.6% to 37%. It provided a 20% deduction for qualified business income of firms organized as pass-through entities, which is designed to provide a degree of parity for pass-through entities that compete against corporations paying the corporate rate. Also, the exemption for the estate tax was doubled to $11.18 million for individuals, which is important for many family-owned businesses within the roofing industry. The Tax Cuts and Jobs Act included the most dramatic tax cuts in more than 30 years.

Based on the act being the central accomplishment of Trump’s first term, it is likely tax policy would not change significantly during a second term if he is reelected. However, the estimated $1.5 trillion tax cut was financed by adding to future budget deficits rather than spending cuts. With federal budget deficits already set to grow to more than $1 trillion annually during the next decade even before the additional COVID-related spending enacted in recent months, the current federal budget situation is unsustainable. Although Trump would presumably be loath to raise taxes, the possibility of tax increases during a second term cannot be ruled out if there is going to be any effort to address soaring deficits and a national debt approaching a level that threatens economic growth.

Biden has indicated he, if elected, would propose policies that would result in significant tax increases for individuals and businesses. Biden’s tax plan would increase the corporate rate to 28% and create a minimum tax on corporations with profits of $100 million or more. The plan also would double the tax rate on Global Intangible Low-Taxed Income earned by foreign subsidiaries of U.S. firms from 10.5% to 21%. And it would phase out the 20% qualified business income deduction from the Tax Cuts and Jobs Act for pass-through businesses with taxable income above $400,000, which could be problematic for many NRCA members organized as pass-through entities. On a positive note, Biden’s plan would establish a Manufacturing Communities Tax Credit to reduce the tax liability of businesses that experience workforce layoffs or closures; expand the New Markets Tax Credit and make it permanent; offer tax credits to small businesses for adopting workplace retirement savings plans; and expand renewable-energy-related tax credits and deductions.

On the individual side, tax increases mostly would be limited to taxpayers earning more than $400,000. Under Biden’s proposal, the top individual income tax rate for taxable incomes above $400,000 would increase from 37% under current law to the pre-Tax Cuts and Jobs Act level of 39.6%. Additionally, Biden would impose a 12.4% Social Security payroll tax on income above $400,000, evenly split between employers and employees. His plan would tax long-term capital gains and dividends at the ordinary income tax rate of 39.6% on income above $1 million and eliminate stepped-up basis for capital gains taxation. He also would cap the benefit of itemized deductions at 28% of value, which means taxpayers in the highest income brackets would face limited itemized deductions.

According to the Tax Foundation, a nonpartisan think tank that analyzes tax policy, these and additional tax-related proposals in Biden’s plan would raise tax revenue an estimated $3.8 trillion during the next decade on a conventional basis. When accounting for macroeconomic feedback effects, the plan would collect about $3.2 trillion during the next decade.

But whatever Biden or Trump will be able to accomplish on tax policy will be largely determined by Congress. Moreover, given the perilous situation of the federal budget and the likely need for the government to begin reducing deficits, it’s not clear the differences between Trump and Biden on tax policy are as stark as the candidates try to portray. The unwillingness of either candidate to discuss spending cuts or reform of programs like Social Security and Medicare, the key drivers of long-term deficits, is troubling and could affect the parameters of tax policy and U.S. economic growth in the years ahead.

Regulatory policy

Another key issue for the roofing industry is regulatory policy. There has been steady growth in the reach of government regulations into nearly every aspect of business activity in recent decades regardless of which political party has been in power. Democrats favor more regulatory intervention in the name of environmental protection, occupational safety, stronger unions and other objectives whereas Republicans tend to prefer less regulation and more reliance on market forces.

Trump’s administration has pursued deregulatory policies at most federal agencies, partially in reaction to the eight years of the Obama administration and concerns that excessive regulations impede economic growth. The Trump administration has sought repeal of or major modifications to many regulations put in place during the Obama years, most notably with respect to environmental and energy-related policies.

A key area of regulatory policy for the roofing industry is workplace safety, which is regulated and enforced by the Occupational Safety and Health Administration. Under former President Obama, OSHA aggressively pursued new regulations purportedly designed to enhance workplace safety. The most consequential rules the agency issued during the Obama administration were a fall-protection regulation for steep-slope roofing in 2010; a regulation to expand injury and illness record-keeping requirements in 2016; and a regulation governing employee exposure to respirable crystalline silica, also finalized in 2016.

NRCA opposed these initiatives and urged OSHA officials to provide more flexibility in regulatory approach when crafting these rules but was largely rebuffed in these efforts. Moreover, Obama appointee David Michaels took an adversarial approach to work site enforcement and scaled back cooperative programs that seek to establish partnerships with employers to improve workplace safety and ensure compliance.

OSHA policy under Trump has been much improved from NRCA’s perspective. Under the leadership of Loren Sweatt, principal Deputy Assistance Secretary for Occupational Safety and Health, the agency has emphasized partnerships with employers to promote workplace safety without initiating major new regulatory initiatives. Sweatt has always had an open door and willingness to work to address NRCA member concerns.

However, the deregulatory zeal of the Trump administration in many other areas of federal policy has not been apparent with respect to OSHA and other agencies within the Department of Labor. DOL under Trump’s first secretary of labor, Alexander Acosta, was more tentative than other cabinet officials in efforts to repeal or modify existing regulations, and the administration failed to obtain a Senate-confirmed OSHA appointee. The relative lack of interest in deregulation at OSHA and other DOL agencies may be because Trump has courted the support of some labor unions, particularly those in the construction industry, which generally oppose deregulation.

Based on the record of Trump’s first term, OSHA policy likely will continue to be generally positive for the roofing industry if Trump is reelected. Moreover, deregulatory efforts in other policy areas under DOL may improve under the leadership of new Secretary of Labor Eugene Scalia. One policy area in which a second Trump administration might move in the direction of more regulation is the issue of mandatory paid leave for employees. Democrats have been pushing for some form of mandatory paid leave for many years and were successful in negotiating an emergency paid leave mandate related to the COVID-19 pandemic with the Trump administration this past March, as well as new paid leave requirements for most federal employees in the 2019 National Defense Authorization Act. Such efforts could advance to the broader business community in a second Trump term, especially given the interest of Ivanka Trump, the president’s senior adviser and daughter, in expanding paid leave benefits.

Biden’s proposed regulatory agenda includes many of the standard Democratic initiatives on environmental protection, union organizing, workplace safety and other policies of past Democratic administrations. There is little doubt a Biden administration will seek to repeal many Trump administration deregulatory initiatives. It also is clear Biden will be urged to move aggressively on regulatory policy from the left flank of the Democratic party.

On the other hand, he is sure to receive countervailing pressure to take a less ambitious approach to regulatory initiatives from the new crop of moderate Democrats elected to the House in 2018. If Biden wishes to avoid a repeat of the past two first-term Democratic administrations that lost House majorities after the first two years (Clinton in 1994 and Obama in 2010), he will likely need to avoid excessive regulatory initiatives and refrain from alienating the business community.

Workforce policy

One of the most difficult challenges facing the roofing industry is the chronic shortage of qualified job candidates, and NRCA has made addressing member workforce needs one of its top priorities.

NRCA is focused on increasing federal funding for career and technical education programs to further expand workforce development opportunities within the roofing industry. Although the budgetary problems of the federal government will make securing increased funding for CTE increasingly difficult, NRCA does not see a substantial difference between Trump and Biden in this policy area.

Another important component of addressing workforce issues involves immigration reform. The Bureau of Labor Statistics projects employment demand for roofing workers will grow 11% during the next decade, and it is clear this demand cannot be met by native-born workers alone given current demographic trends.

NRCA has long supported immigration reform that addresses U.S. security and economic needs. This includes strengthened border security, improved workplace enforcement to combat illegal immigration, reforming the antiquated visa system and addressing the issue of undocumented workers in a balanced manner. Federal policy that provides for sufficient legal immigration to meet workforce needs is vital to the future prosperity of the roofing industry as well as the broader U.S. economy.

There is a stark difference between the presidential candidates regarding immigration reform. Trump has taken a hard-line stance on immigration and made it his signature issue during the 2016 election campaign. At that time, he pledged to build a wall along the southern U.S. border and create a “deportation force” that would deport some or all the estimated 11 million undocumented immigrants working in the U.S.

Trump’s immigration policies have largely been consistent with the tone of his 2016 campaign. During his first two years in office, when Republicans controlled the House and the Senate, Trump endorsed legislation to reorient U.S. immigration policy from its current family-based emphasis to a merit-based system while also mandating use of E-Verify for all employers outside of agriculture. Although NRCA agrees with a move toward a merit-based system, Trump’s plan would have reduced legal immigration by between 25% to 40% and lacked visa reform needed to address workforce needs.

Different variations of Trump’s plan failed on votes in the House and the Senate in 2018, drawing opposition from most Democrats and a significant number of Republicans. After the failure of these legislative efforts, the Trump administration worked on refining its immigration proposal, and NRCA met with administration officials to discuss the proposal on several occasions. Although the plan has never been released in legislative form, the general outline demonstrates it will only address high-skilled immigration policy (individuals with a bachelor’s degree or higher), which is insufficient and potentially counterproductive to the roofing industry’s needs.

Another aspect of Trump’s immigration policy was to rescind the Deferred Action for Childhood Arrivals program, which was established in 2012 by Obama to provide temporary legal status for undocumented young adults who were brought to the U.S. illegally as minor children.

Additionally, Trump rescinded Temporary Protected Status for individuals seeking refuge in the U.S. as a result of natural disasters or civil strife in their native countries, many of whom have been working legally within roofing and other industries for many years; the change subjects many of these individuals to potential deportation.

The Trump administration apparently rescinded DACA and TPS to use them as bargaining chips to get Congress to provide funding for the southern border wall and Trump’s proposed immigration policy reforms. However, no deal has been reached, and the stalemate on reforming immigration policy is more polarized than ever.

With numerous individuals with DACA or TPS status working legally in the roofing industry, NRCA supports legislation to provide permanent legal status for them. Legislation to achieve this goal was approved by the Democrat-led House in 2019, but the Republican-controlled Senate has shown no interest in considering the House-passed bill or offering an alternative proposal. With court-ordered extensions of TPS status for many individuals set to expire in January 2021, the future of more than 300,000 TPS workers remains in limbo.

Looking ahead to a potential second term, Trump has not provided any firm indication for how his immigration policy might evolve. It is possible he might work to reach a deal on immigration reform with Congress, especially because there is broad agreement that a more effective immigration policy is critical to boosting economic growth. Trump has, on occasion, commented he recognizes the need for legal immigration for workforce purposes and presumably understands this need based on his company’s employment of workers via the H-2B seasonal visa program.

However, Trump’s instinct on immigration policy has repeatedly been to cater to the portion of the electorate that wishes to see legal immigration curtailed along with efforts to curb illegal immigration. It’s not difficult to envision Trump maintaining his hard-line stance during a second term for political reasons.

Biden’s position on immigration reform is different from Trump’s in nearly all respects. Biden’s immigration plan notes that, in his first 100 days in office if elected, his administration will work to protect current DACA recipients, presumably by continuing the existing program in some form temporarily while seeking legislation as a permanent remedy. His plan also calls for an immediate review of TPS and pledges “TPS holders who have been in the country for an extended period of time and built lives in the U.S. will also be offered a path to citizenship through legislative reform.”

Biden’s immigration plan also indicates he will pursue “comprehensive immigration reform” legislation in Congress. The major components of his plan include an overhaul of the visa system, a plan to provide undocumented immigrants who meet certain criteria with a path to citizenship and strengthening efforts to ensure employers certify the employment status for new hires (which would likely be an expansion of E-Verify), among other policies.

NRCA has supported various forms of comprehensive immigration reform during the past two decades, and Biden’s plan is similar to past legislation NRCA has supported. But it should be noted labor unions within the construction industry have traditionally been opposed to expanding visas for workforce purposes despite being supportive of other aspects of immigration reform. Given Biden’s close relationship with organized labor, he may be pressured by unions to restrict new visas for the construction industry as happened in legislation approved by the Senate in 2013. It will be important for NRCA and allied construction organizations to continue developing support for visa reform among Democrats in Congress to accomplish immigration reform that meets our industry workforce needs.

Congressional races

Although much of the media attention is focused on the presidential contest, the battle for control of Congress also is vitally important to the future direction of government policy. It is important to understand the dynamics at play in the battle for the House of Representatives and the Senate as the fall campaigns take shape.

After the 2018 midterm elections, Democrats took majority control of the House for the first time since 2010 by capturing 40 seats in what was generally viewed as a repudiation of Trump’s first two years in office by moderate voters in suburban areas of the country. There are 31 freshman Democrats who now represent congressional districts Trump won in 2016, and Republicans have argued they have a legitimate chance of picking up the net 20 seats needed to reclaim the majority. However, a wave of retirements among GOP incumbents has produced more open seats that are more competitive for Democrats. Also, Trump’s lackluster showing to date at the top of the ticket may be a drag on Republican candidates, and current polling suggests Democrats are likely to retain the House majority in 2021, barring a major change in the political environment before Election Day.

In the Senate, the current Republican majority is in jeopardy. Republicans control the chamber with a 53-47 advantage, and Democrats need a net pickup of four seats to take the majority if Trump is reelected and only three seats if Biden is elected (the vice president also serves as president of the Senate and may break tie votes).

Republicans appear likely to flip one Senate seat as GOP candidate Tommy Tuberville appears likely to defeat incumbent Democrat Doug Jones in Alabama. But the key to the Senate majority is likely four seats that are either true toss-up races or where the incumbent Republican is trailing in the polls (Arizona, Colorado, Maine and North Carolina). Moreover, there are at least four additional Republican seats (in Iowa and Montana and two in Georgia) that are to varying degrees competitive and could be captured by Democrats. The scenario building as of late August puts the chances for Democratic control of the Senate in 2021 by one or two seats at roughly 50-50 with larger gains a possibility.

With the House likely to stay in control of the Democrats and the possibility of a Biden presidency, the effort to retain control of the Senate is vital for Republicans. If Sen. Mitch McConnell (R-Ky.) retains his current position as majority leader in the new Congress in 2021, Republicans will have much more leverage to block Biden’s agenda or negotiate compromises from a position of strength should Biden be elected.

Moreover, Republicans retaining the Senate majority in the event of a Biden win is even more important given the possibility that Democrats, if they narrowly control the Senate in 2021, might finally change Senate rules to end the legislative filibuster, allowing Senate approval of bills with a mere majority vote rather than the traditional 60-vote margin. The 60-vote margin has already been done away with in recent years for Senate consideration of judicial and executive branch nominations, and Democrats will be under great pressure to take this unprecedented step to move their agenda through Congress if they have majority control.

Vote!

NRCA works diligently in support of policies that enable roofing industry entrepreneurs to start and build prosperous businesses in their communities and stands ready to work with the president and lawmakers from both parties when a new administration and Congress convene in early 2021. NRCA encourages all members to vote and make their voices heard. There is much at stake in the 2020 elections. Make sure you take the time to learn about the candidates for president as well as those running for the Senate and House of Representatives so you can make informed decisions Nov. 3.

Duane L. Musser is NRCA’s vice president of government relations in Washington, D.C.



Did you know?

The best opportunity to advocate for the roofing industry will be Roofing Day in D.C. 2021 scheduled for March 23-24 in Washington, D.C. All roofing industry professionals are encouraged to attend the largest roofing industry advocacy event of the year and bring one or more field employees from their companies. For more information, go to nrca.net/advocacy/roofingday.

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