Economist Anirban Basu, Chairman and CEO of Sage Policy Group, addressed the conference on May 4 and provided a wide-ranging economic forecast for 2012 and beyond. Basu pointed out that despite our continuing economic troubles here in the U.S., the global economy has actually been expanding for quite some time; in 2010 it grew more than 5%, and last year saw growth of 3.5%.
Stateside, Basu said that a U.S. recession is no longer imminent, but we’re not out of the woods yet – the economy has definitely hit a soft patch, and several “black swan” threats remain, including tensions over Iran’s nuclear ambitions and the European fiscal crisis. These seemingly distant problems could still have a serious impact on the domestic economy.
Looking ahead to 2013, Basu said that the expiration of the Bush tax cuts and the end of the payroll tax “holiday” could pose challenges to a strong recovery – not to mention uncertainty over how Congress will react. “Many headwinds remain, and the economic recovery could easily falter,” he said. “Leading threats to the U.S. economy are political, not economic.”
Contractors Hit the Hill
After the morning sessions, contractors headed for Capitol Hill, where they met with their local representatives to discuss many issues, including:
1. Bid listing. Even general contractors agree on paper that bid shopping is an abhorrent practice. Nevertheless, it happens all the time on public and private work. QCA believes the practice of bid shopping should be curtailed at the federal government level by requiring prime contractors to list their subcontractors when submitting their bid proposals – about 12 states already have similar requirements. QCA members lobbied their legislators to cosponsor H.R. 1778, the Construction Quality Assurance Act of 2011, that would require prime contract bidders on direct federal construction projects of $1 million or more to list in their bids subcontractors that would perform work of $100,000 or more.
2. Payroll fraud and misclassification of employees as independent contractors. QCA is calling for stricter laws to stop willful misclassification of employees as independent contractors and close schemes & loopholes for tax avoidance/payroll fraud.
3. Project labor agreements. A current executive order (EO 13502) permits agencies and contracting officers to use project labor agreements (PLAs) when they deem it appropriate as a tool in acquisition planning. It does not mandate, in any way, the use of PLAs on public projects. PLAs are most predominant in the private sector where owners value them because they facilitate project completion and create efficiencies in the construction process that get good project results. Republican and Democratic governors alike have endorsed the use of PLAs. QCA members are asking legislators to oppose bills and amendments that would effectively prevent the implementation of PLAs on federal government construction projects.
4. Multiemployer pension plans. The multiemployer provisions of the Pension Protection Act (PPA) expire in 2014. The long-term viability of defined benefit pension plans depends on the viability of the employers contributing to them. Contributing employers have made all contributions associated with every job every year. The law did not allow for plans to build a “rainy day” fund. Two historic market downturns were devastating to plans that depend on investment income. Employers want structural changes to allow them to provide a reasonable and sustainable retirement to their employees without bearing all the risk inherent in the current system. QCA employers are participating in the national Retirement Security Review Commission (RSRC), which includes labor and management, hosted by the National Coordinating Committee of Multiemployer Plans (NCCMP).
Although it is unclear what proposals might emerge from RSRC, employers need members of Congress to be open to joint labor-management proposals that give more tools to multiemployer plans to handle their own problems. Such proposals would also help address Pension Benefit Guaranty Corporation (PBGC) multiemployer liabilities.
5. Energy Efficient Commercial Building Tax Deduction (Section 179D). QCA wants Congress to create meaningful, measurable tax incentives to save energy, save money and create jobs. Buildings consume 39% of the energy and 74% of the electricity in the United States. That amounts to more than $170 billion in energy bills per year for the commercial sector alone. Increasing the energy efficiency of America’s commercial buildings will put money into the pockets of business owners, spur job growth in both construction and manufacturing sectors, and lower energy demand and expense for all Americans. Section 179D, created in 2005, needs to be updated to provide a tax incentive provision that is specifically targeted toward encouraging existing building upgrades. It should provide for measuring energy savings based on the building’s energy use before and after the upgrade; incentives beginning when a 20% improvement over the building’s prior performance is achieved; tax incentives useable for a broad range of building efficiency stakeholders.
QCA members asked lawmakers to pass several measures, including H.R. 4017, the SMART Energy Act, for increased performance contracting, efficiency loans for commercial and residential projects as well as a goal to double combined heat and power / waste heat recovery and a boost to industrial efficiency retrofits.