Chris Myers, Federal Government Affairs Director

Transcription

1 Chris Myers, Federal Government Affairs Director Corporate Tax Background: The United States has the highest corporate tax rate in the world, and is the only major world economy that has not modernized its international tax rules in recent years. In fact, Congress completed the last major tax reform effort in 1986 and wrote our international tax rules over 50 years ago. Our current system is outdated and out of step with the rest of the world, putting U.S. based companies at a competitive disadvantage. To allow the economy to grow, our country needs a comprehensive tax reform plan that lowers tax rates on businesses, updates our international rules and does all of this in a fiscally responsible way. The jobs and tax reform package President Obama introduced last year was not well received by the Hill or by the business community. The President did get some credit for calling for corporate tax rate cuts, but that was not a new idea. The net impact of the speech only seemed to reinforce the impression on Congressional Republicans that tax reform will need to be worked out with Democrats and Republicans on the Hill, and not with the involvement of the President. We expect the tax writing House Ways & Means Committee to work on a tax reform bill in October. The Senate Finance Committee is also expected to work on a tax reform measure this fall. A number of expired tax breaks (known as tax extenders) will need to be addressed before the end of the year, including tax credits for Research and Development. Caterpillar and the business community will continue to advocate for action on extenders, with the Senate likely to act first. The House may not act until much later in the year. Talking Points: Caterpillar advocates for tax policy that modernizes our international tax laws and provides a level playing field that would allow the U.S. to compete in global markets against foreign-based companies. Cutting the corporate tax rate should be a priority, as it would make the United States a more attractive place to invest by both U.S. and foreign firms. We re not asking for a free lunch, but recognize that tax reform must be done in a fiscally responsible way. That s why Caterpillar is willing to put our current tax preferences on the table for policymakers to evaluate and to help pay for the cut to the corporate tax rate and the international tax reforms. The right tax reform would certainly help Caterpillar compete and comprehensive reform that includes businesses of all types, including corporations, can also help our dealers, suppliers and customers. If Washington wants to help expand manufacturing in the United States, foster private sector job creation and spur economic development, then meaningful reform of our outdated tax system is a good place to start. It is time to be serious about tax reform. We welcome opportunities to work with Congress and the Administration to ensure that Caterpillar remains competitive in markets at home and abroad.

2 Bill Lane, International Government Affairs Director Background: The U.S. is pursuing one of its most ambitious trade agendas in decades and for U.S. manufacturers, the stakes are high. With more than 30 percent of U.S. GDP tied to international trade and investment and more than one in five U.S. jobs supported by trade, engagement in the international marketplace is now more important to our economy than ever before. After six months of complaining about lack of support, USTR and Congress have been overwhelmed with s supporting a new grant of Trade Promotion Authority (TPA). So far Cat employees have sent nearly 20,000 s in support of TPA. In contrast, all other businesses combined have sent about 2,000 letters. At the urging of their CEOs, Honeywell and Texas Instruments are embracing the Caterpillar model and will soon join the effort. It is an understatement to say that USTR is impressed. Caterpillar knows the benefits of free trade. For the past five years, tens of thousands of jobs have been supported through more than $82 billion of exports from our U.S. factories. These exports have supported thousands of U.S. jobs While we have had considerable success using free trade agreements (FTAs) to open markets with countries like Chile, Australia, Peru and Colombia, there's more to be done. Caterpillar exports still face significant trade barriers in many parts of Asia and Latin America, so we must continue to be a strong advocate for more trade and legislation that will help keep our nation competitive. We need the continued benefit of access to foreign markets and overseas customers through trade, and need Congress to approve TPA. By renewing this authority that expired in 2007, the President and Congress can work effectively to craft, finalize and ensure the quick passage of trade agreements that support and create jobs here in the U.S. and around the world If foreign markets are opened even further and if the international playing field is level, we can expect even more opportunities for Caterpillar

3 Jason Lynn, Federal Government Affairs Manager Dwayne Bolton, Federal Government Affairs Manager Background: The 2012 federal surface transportation law, Moving Ahead for Progress in the 21st Century (MAP-21), was supported by Caterpillar, in part, because it institutes a number of major policy reforms that address past concerns about the focus and effectiveness of the highway and transit programs. The result is a restructured and reformed program with a renewed federal role that targets limited resources towards national priorities and maximizes the potential of those investments to deliver transportation improvements. While both parties heralded the new reforms and the legislation was overwhelmingly approved, it is a partial victory. In less than two years, the revenue stream into the Highway Trust Fund will be inadequate to even maintain existing highway and transit investment levels again threatening hundreds of thousands of U.S. jobs. Caterpillar Chairman & CEO Doug Oberhelman helped launch The Alliance for American Competitiveness a new transportation coalition dedicated to promoting economic growth through strategic infrastructure investment. The coalition will be used to accomplish three goals to inform lawmakers about the local and regional economic benefits of infrastructure investment; to advocate for a long-term stable revenue source for infrastructure investment; and, to define the broad economic impact of infrastructure investment. A bill is expected to be introduced this much, that includes funding that will allow states and local government to invest in long-term highway and rail construction projects that utilize equipment supplied by companies like Caterpillar. The next step is for Congress to approve a long-term Highway Trust Fund revenue solution to complement MAP-21 s policy reforms before the law expires in September This long overdue combination would maximize the ability of federal resources to build and maintain a national surface transportation network that boosts economic competitiveness and job creation. The Highway Trust Fund can no longer support current levels of investment. While some suggest devolving the programs to the states or drastic spending cuts, Congress demonstrated during the MAP-21 debate the votes aren't there for either devolution or cutting investment by 60 percent to what revenues could support in That means either more general fund transfers or new revenues. Continuing to supplement existing Highway Trust Fund revenues with general fund transfers will add $154 billion to the deficit over the next 10 years--exactly the opposite result Republicans are trying to achieve with their focus on getting the debt on a sustainable path. We agree with House Transportation Chairman Shuster that this is an urgent problem and that all revenue options should be on the table. We need to fix this issue and ensure we have a long-term stable revenue source for the Highway Trust Fund. A long-term Highway Trust Fund revenue fix would be ideal as part of a broader tax/entitlement reform package because it would generate economic growth and contribute to deficit reduction.

4 Katie Hays, Federal Government Manager Background: Immigration reform has been a top issue of discussion in Congress this year. While Caterpillar's interests are mostly on the high skilled side, we are actively engaged in advocating for common sense reform to our immigration system. The Senate passed the Border Security, Economic Security and Modernization Act (S.744) by a vote at the end of June, and the House must act next. The House has strongly signaled it will not take up the Senate bill for a vote but would rather opt for a series of smaller bills that will address the important aspects of immigration reform in a "piecemeal" approach possibly this fall, including Border security, E-Verify, Agriculture, and high skilled reform. We will continue to encourage the House to move forward and make progress on this important issue to Caterpillar and our customers. We hope that the House will debate these bills this summer. House leaders continue to discuss the best path forward on immigration reform. There are some who feel that there could be an opportunity to vote on certain pieces this summer, but others feel that it won t be possible before the elections in November. The business community continues to make the economic case for reform and continues to push House leadership to bring reform to the floor. Talking Points: Caterpillar supports common sense, comprehensive reform. o We believe a comprehensive solution to immigration is in our national interest. It is up to Congress to determine whether the solution is comprehensive and if the solution moves as one bill or as several bills. o High-skilled immigration issues have been a priority for Caterpillar for many years, and have become increasingly critical as the economy has improved. Although more and more skilled jobs have been created in the United States, they go unfilled. Immigration reform is an economic and competitive issue o We are an American company. We were founded here and we consider the United States as home. However, the world is changing and our competition is global. We need access to the world s best talent working for us regardless of where they are from. o Our people are our greatest asset. We have gaps in our workforce today, especially in the STEM fields, and we rely on immigration reform to fill these gaps. Our immigration system is broken o The last time our nation s immigration laws were updated was in Think about how much our world has changed since then Mark Zuckerberg was two years old and a cell phone cost $1,300. Our technology has changed dramatically (as it has on Caterpillar machines) and yet the laws haven t changed. Immigration reform protects American jobs o Every foreigner who graduates from a U.S. university with an advanced degree in a STEM field and remains in the United States to work creates on average 2.62 jobs for American workers. o We would rather hire Americans for every job open in America, but we simply aren t graduating enough STEM grads to fill the jobs we have available. We pay foreign workers the same wages as we do U.S. workers and advertise jobs first to U.S. workers. o Caterpillar currently performs more than 85 percent of our R&D here in the United States, yet U.S. sales are only about 33 percent of our business. We want to keep those jobs here in the United States.

5 Background: Last July, President Obama gave a speech at Georgetown University laying out a Climate Action Plan (Plan) with both domestic and international elements. The two key features of this very diverse initiative are: first, his plans do not require the involvement or approval of Congress and second, many components of the Plan are not new but continue his Administration s heavy emphasis on clean energy (including natural gas). The most immediately controversial portion of the President s Plan was his direction to the Environmental Protection Agency (EPA) to issue a new version of a proposal originally published in April 2012 creating GHG emission standards for future power plants. Additionally, the President called for an end to U.S. government support for public financing of new coal plants overseas, except for (a) the most efficient coal technology available in the world s poorest countries, in cases where no other economically feasible alternative exists, or (b) facilities deploying carbon capture and sequestration. While potentially beneficial with regard to natural gas, we are very concerned about the implications for coal and coal based power generation, both here and abroad, under this diverse and comprehensive Plan. This new proposal injects significant uncertainty into business decisions and planning for coal mines, as well as coal-fired utilities. The Plan has the potential to lead to significantly higher energy prices, and to the loss of many jobs. Background: Energy, or the lack thereof, is a key factor in sustainable progress and development around the world. Energy consumption is rising rapidly, driven by worldwide population growth, developing economies, improving global living standards, and the burgeoning use of ever more energy-dependent technologies. Caterpillar is one of the world s leading technology suppliers to the diverse energy market, and leverages its technology and innovation to meet the world s growing energy needs. We have a fundamental interest in energy as a global energy consumer, global industrial manufacturer, and a major manufacturer of energy conversion and power generation products. Caterpillar supports balanced and comprehensive energy policies that include the responsible development and utilization of all energy resources, both traditional and alternative energy sources. There is no one single solution to providing globally abundant, reliable, secure, clean and reasonably priced energy. Leadership is required to forge consensus and a commitment to providing global energy and related infrastructure needs that address economic development, stability and environmental impacts. Regulatory approaches should provide a competitive, technology neutral and level playing field in which Caterpillar and our customers can operate. The development and use of energy efficiency strategies such as remanufacturing and technologies, such as distributed generation, combined heat and power, electric drive industrial equipment, clean diesel, and unconventional gas engines and turbines will be critical to answering the challenge.

6 Background: Many key provisions of the Affordable Care Act (ACA), or Obamacare, are set to go into effect in January 2014, including Exchanges, Subsidies, the Individual Mandate and other requirements. However, On July 2, the Treasury department announced it would delay by one year the employer reporting requirements and the employer mandate penalties in Obamacare. Caterpillar continues to advocate for policies and legislation that will allow us to continue to provide affordable, quality health benefits to our employees. We support H.R. H.R.3489, which would repeal the funding mechanism for the transitional reinsurance program, a $63 per head tax that we will begin paying in 2014 and S that would delay the collecting of funds for the transitional reinsurance program. Caterpillar also supports passage of H.R which would reinstate the 40 hour work week. Talking Points: While Caterpillar was prepared to meet all of the requirements to comply with the ACA, we are grateful for the additional year we have to comply with these significant, new requirements. There remains a great deal of concern from the business community on other aspects of the ACA that we will continue to seek repeal or delay. Those include the definition of "full time" employee to be changed from 40 hours down to 30 hours, a transitional reinsurance fee that employers will pay for the first three years, and whether or not the exchanges will be fully functional in time. We will continue to work with Congress and the Administration to change some of these provisions

7 Background: Tom Perez was sworn in as the new Secretary of Labor at the end of July. Formerly Labor Secretary for the state of Maryland, Secretary Perez has publicly assured business leaders that he is open minded, businesses are bracing for many new regulations to come forward. In his second week on the job he sent two major regulations to the Office of Budget and Management for its review, both of which could impact our hiring practices. Also, as of July 31, the National Labor Relations Board now has five members on the Board and will begin addressing a significant caseload before them, and may consider issuing other regulations that could impact companies like Caterpillar. National Labor Relations Board Ambush Elections: Regulations were originally released by the NLRB in December 2011 would remove pre-election appeals and cut election time in half (closer to 20 days). The U.S. District Court (DC) invalidated the regulation in May The judge found that the Board did not have the requisite quorum of 3 members. In June, the NLRB filed a motion to reconsider the judgment because Member Hayes was present but abstained from voting. In February 2014, the regulations were re-issued by the NLRB. Talking Points: The regulation is attempting to solve a problem that doesn t exist. The average time from petition to election under the existing system is 31 days, with over 90% of elections occurring within 56 days Shortening this time frame will allow for the unions to communicate their message without allowing the employer adequate time to rebut and communicate with their workers This could shorten the time we have to educate our employees prior to a union vote, while giving more time to the unions who have been campaigning for a long period of time

8 Tom Walters, State Government Affairs Director Patent trolls are a new industry in America that lease or buy obscure patents and then send threatening and misleading demand letters to unsuspecting businesses and consumers alleging patent infringement. Through deceptive practices, they intimidate people into sending them money to avoid a more costly legal battle. As the federal government considers how to deal with this problem within a comprehensive patent reform effort, many state governments are moving quickly to pass their own laws against trolls. Unfortunately, in their rush to inhibit troll behavior, many of these proposals inadvertently hurt legitimate patent holders like Caterpillar. Working with Legal Services, our federal lobbying team, and like-minded companies in the 21 st Century Coalition for Patent Reform, the Caterpillar state government affairs team has been engaged in a multi-state effort to protect legitimate patent communications and prevent unintended legal hurdles that these bills would create when attempting to enforce our patents. Working with the Illinois Attorney General s office, Caterpillar was able to successfully negotiate a compromise amendment that should serve as model legislation for other states intent on passing patent demand letter legislation. The Illinois language will now be proposed by the Intellectual Property Owners Association and the 21 Century Coalition for Patent Reform as model language for the federal patent reform effort. Caterpillar supports legislation to protect unsuspecting businesses and customers against bad-faith patent demand letters Caterpillar also supports legislation that protects legitimate business to business patent licensing communications. Rob Carney, State Government Affairs Manager In 2011, Governor Pat Quinn signed into law a 67% income tax increases. The increase was promised as a temporary tax that would be used to address the state s deficit, and go away after three years. Unfortunately, lawmakers and the governor did not take that time period to adequately control state spending. Now Governor Quinn is calling for the increase to be made permanent. Despite bringing in an additional $26 Billion in revenue because of the tax, Democrats are projecting a $4 Billion budget shortfall if the tax is allowed to automatically lower in Democrat leaders are calling for the tax to be made permanent before the legislative session ends in May. A more likely scenario is for them to wait until after the November elections to take action. More reforms are necessary to create a competitive economic climate in Illinois. The state cannot tax itself into prosperity. Growing the economy is crucial in solving our fiscal woes.

9 Kathy Barber, Southern State Government Affairs Manager The Common Core State Standards are a new set of learning standards that have been adopted in 45 states across America. Created for students in kindergarten through 12th grade, these standards were designed by educators and academic experts including teachers and parents to ensure that all students, regardless of where they live, are learning what they need to know to graduate from high school ready for college or a career. With a strong effort to turn back Common Core at the capitol in Nashville, Governor Haslam enlisted the assistance of the Tennessee Chamber of Commerce and Caterpillar to support the continued implementation of these statewide standards. Caterpillar global government and corporate affairs team worked closely with Cat Insurance President Clay Thompson to strategically place an op-ed in Nashville s newspaper The Tennessean supporting Common Core. Thompson stated, For Caterpillar, it is critical that Tennessee schools are producing future employees equipped to compete in a global marketplace. In addition to the op-ed, a grassroots letter writing campaign was implemented encouraging Cat Financial employees to write their state legislators in support of Common Core. These efforts, in addition to other stake holders involvement, stalled the progress of legislation that would have rolled back the implementation. Discussions are currently ongoing with Governor Haslam and legislative leaders to reach a compromise that will not delay implementation. Tennessee has made great improvements in the three years since the Common Core has been adopted. Recently the National Assessment Education Program progress report noted that Tennessee s level of student improvement ranked first in the entire nation. The business community is very concerned about proposals to delay or roll back the Common Core standards. These standards are designed to reflect the knowledge and skills that students of Tennessee need to succeed in college and in careers. With students fully prepared for the future, Caterpillar and our nation will be wellpositioned to compete successfully in the global economy. Jim Halloran, Western State Government Affairs Manager In an effort to move away from the traditional lowest price bidder purchasing model in California, Transportation California (on behalf of Caterpillar) has introduced legislation that will allow the California Department of Transportation (Caltrans) to purchase equipment for heavy mobile fleet vehicles using a life cycle cost approach. Transportation California is an industry coalition created to maintain and enhance infrastructure spending in California. Transportation California s bill will allow Caltrans to consider the best long term value for the state when purchasing construction equipment. Implementing the best value approach will make Caterpillar dealers very competitive when bidding. The bill passed out of Assembly Transportation Committee and heads to Assembly Appropriations for further consideration. Caterpillar, California Manufacturers & Technology Association, John Deere and Transportation California all testified in support of the measure. Caterpillar supports Transportation California s legislation allowing Caltrans to consider life cycle costs when purchasing equipment for the State. When considering the best value, it is essential to consider initial cost, maintenance costs, operating costs, useful life of the equipment and value at the end of ownership. When these factors are all considered, Caterpillar equipment is very competitive.