INSIGHT: US chems, manufacturers hail election results

04 November 2010 16:26  [Source: ICIS news]

US elections bring major party shift in CongressBy Joe Kamalick

WASHINGTON (ICIS)--US chemical producers and the broader manufacturing sector hailed this week’s national election results and vowed to work with the new Congress in 2011 to undo onerous regulations of the Obama administration, block new tax increases and roll back some existing taxes.

“The election returns have brought us - if I might borrow a line - change we can believe in,” said Charles Drevna, president of the National Petrochemical & Refiners Association (NPRA).

He was borrowing the campaign slogan, “Change We Can Believe In”, that then-candidate Barack Obama used in his successful presidential bid in the 2008 elections.

But the changes wrought by Tuesday’s mid-term national elections represented major reversals for President Obama and his Democrat allies in Congress, and in sweeping and significant losses for Democrats in hundreds of state-level contests.

In the US House of Representatives, Republicans gained at least 61 seats formerly held by Democrats, giving the “Grand Old Party” or GOP a solid majority of at least 240 representatives against the diminished head-count of 185 Democrats.  (Ten close House races among the total of 435 contests were still undecided.)

In the Senate, Republicans picked up at least six seats for a total of 46, while Democrats held on to a slim 52-seat majority.  (Two Senate contests also were still to be resolved in recounts.)

While those gains in the House and Senate were substantial on their own, Republicans made even greater advances in state contests for governor and in elections for state legislatures.

Republicans added seven gubernatorial wins, giving them the top executive position in a total of 29 states, while the Democrat total fell back to 17 governors.  (There is one independent governor, and three tight gubernatorial contests were still being decided.)

At least 19 state legislatures - and possibly as many as 23 - switched from Democrat majorities to Republican control. 

Among those contests, the North Carolina legislature will have a Republican majority in 2011 for the first time since 1870, and the Alabama legislature is in Republican hands for the first time since 1876.

These gubernatorial and legislature shifts are highly significant because next year many states will undergo redistricting, with state legislators drawing new geographic boundaries for political constituencies for members of the US House.

Traditionally, the party that holds the governor’s seat and majorities in the state’s legislature draw those lines to ensure the greatest number of their party’s representatives in Congress and to eliminate or reduce the number of districts held by the opposition.

Those redistricting changes at the state level will have impact, perhaps profoundly so, on the US presidential and congressional elections in 2012 and beyond.

Referring to the major Republican gains in Congress, Drevna said:  “This should be a welcome change from the anti-business and anti-manufacturing beliefs that motivated many of the incumbents and other candidates on the Democratic side who went down to defeat.”

“As a result of the election, it’s a safe bet that cap-and-trade and some of the other more extreme legislation that would destroy jobs in many industries and cause grievous harm to families across our nation will not pass both houses of Congress in the next two years,” he said.

In addition, Drevna noted, “With fewer Democrats in the House and Senate, President Obama will have a lot harder time winning congressional approval to slap new taxes on the refining and petrochemical industries”.

The White House and Democrat leaders in Congress had planned to raise taxes or eliminate some tax credits for oil and gas producers to help fund other programmes, and Democrats also had sought to revive a special tax on chemical companies to pay for environmental remediation work.

US specialty and batch chemical manufacturers also welcomed the new political profile in the 112th Congress that will convene in January.

“The next Congress must govern with steadfast attention to improving the nation’s high unemployment rate and make manufacturing a priority again,” said the Society of Chemical Manufacturers and Affiliates (SOCMA).

The specialty chemicals trade association added that the next Congress must work more closely with large and small manufacturers “to reduce or remove regulatory burdens that impose barriers to chemical manufacturing and job growth in our industry”.

The American Chemistry Council (ACC) said that it was still analysing results from Tuesday’s voting but that it anticipates more help from Congress in advancing manufacturing and industry competitiveness in the global marketplace.

“We look forward to working with lawmakers on both sides of the aisle in the new Congress to ensure America’s chemical industry continues to drive innovation, to create high-paying jobs and to strive to be the most competitive in the world,” said Anne Kolton, the council’s vice president for communications.

SOCMA added that it expects the new Congress to ease tax and regulatory burdens.

“We don’t want our future to be one in which products continue to be innovated here in the US only to have the high cost of regulation force production overseas,” the association said.

To encourage congressional action on tax cuts and regulatory reform, SOCMA said it would be increasing its lobbying efforts, involving more of its members in making direct contact with key members of Congress.

The National Association of Chemical Distributors (NACD) also weighed in with high hopes for the new Congress.

“With the new balance of power between Congress and the White House, the road is now paved for more reasonable regulation and policies that will help businesses to grow and create jobs,” said NACD president Chris Jahn.

Jahn said the significant shift in the political make-up of Congress will be important as Congress takes up such industry-critical issues as site security legislation, reform of the Toxic Substances Control Act (TSCA), taxes and regulation of hazardous materials in transit.

Beyond the chemicals sector, the shift on Capitol Hill was hailed as well by the broader manufacturing industries.

John Engler, president of the National Association of Manufacturers (NAM) and former Republican governor of Michigan, said that Tuesday’s election results amounted to “a pretty substantial day for manufacturers across the country”.

“It augers well for manufacturing jobs and for employment in general,” he told a news conference.

He said the reaction among the NAM’s 14,000 member manufacturing companies was “optimism and considerable excitement about the possibilities that lie ahead”.

“We are looking forward to the next Congress to be a strong advocate for free markets and the capitalist system,” he said. “We’re optimistic and look forward to changes in policy.”

He said he hopes the new Congress will move quickly on energy production and energy efficiency issues, approval for long-pending US trade agreements and the undoing of restrictive policies enacted by the current Congress or advanced by the Obama administration with regulations.

In particular, he said he hopes Congress will move quickly to reassert its authority over the Environmental Protection Agency (EPA) and that agency’s controversial plans to begin regulating and restricting industrial emissions of carbon dioxide (CO2) and other greenhouse gases in the new year.

“The EPA has been getting way outside its authority under the Clean Air Act” in reaching to regulate greenhouse gases, he said.  “They’re getting far away from what Congress authorised in 1970 with the act.”

“A lot of these over-the-top regulations and legislative overkill are going to be reviewed,” Engler added.

He urged Congress to provide a multi-year extension for the so-called Bush tax cuts that are to expire at the end of this year, and he called for more domestic energy production, permanent renewal of the research and development (R&D) tax credit, and authorisations for renewed development of the US nuclear power industry.

In the run-up to the election, Republicans promised that if returned to the majority in either house of Congress, they would insist on congressional approval for any administration regulatory moves that would cost the economy $1bn or more.

NPRA’s Drevna also voiced hope that the new Congress would oppose draconian environmental policies, and he said the association was ready to go into court to block such policies if necessary.

“Faced with stronger opposition to enacting his environmental and energy agenda through legislation, it’s very likely that President Obama will step up his efforts to achieve his goals through regulation,” Drevna said.

“Congress may be able to block some regulations, but it’s too early to speculate,” he added.

The Republican-majority Congress is expected to deny funding to EPA to carry out its plan to regulate greenhouse gases.

If that doesn’t work, said Drevna, “We’re prepared to go to court when necessary to respond to harmful regulation with litigation.”

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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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