5

Jul
2014

KY Senate Candidates McConnel and Grimes Don’t have a Clue

Rachel Maddow Slams the Republicans

I was flipping through the channels the other night and saw a picture of the Brent Spence Bridge on MSNBC, so naturally I had to stop and watch the story. Generally I wouldn’t be caught dead watching MSNBC, but apparently Rachel Maddow led her June 24th show calling the Brent Spence Bridge “an unusual corner of American politics.”

She noted the bridge more or less links the territories of two of the most powerful Republicans, Senate Minority Leader Mitch McConnell in Kentucky and Speaker of the House John Boehner in Ohio (Maddow uses Brent Spence Bridge to slam Republicans, 2014).

Yet the bridge hasn’t been built, Maddow said. The earmarks that lawmakers like McConnell used to bring back are no longer allowed, she said.

“Under the evolving principals of the Republican Party, Republicans are not allowed to do that anymore,” Maddow said. “Unfortunately, that bridge needs building, but without an earmark, no one is sure how that bridge will be paid for (Maddow uses Brent Spence Bridge to slam Republicans, 2014).”

Normally I would have been offended by Maddow’s slam on the Republicans, but now I think even the most devout Republican in Northern Kentucky would have to admit that there is a kernel of truth to her criticisms. Mitch McConnell has done virtually nothing in regard to securing the funding for a new bridge and has pushed back saying it is a “local issue.” He has only recently taken an interest in the bridge funding due to what’s shaping up to be a hotly contested Senate seat in the fall against Democratic candidate Alison Lundergan Grimes.

Mitch McConnell Comes to NKY with a Grand Plan

It was leaked to the Enquirer that U.S. Sen. Mitch McConnell would come to Northern Kentucky Friday, June 20th with a plan that could pay for at least some of the $2.6 billion Brent Spence Bridge project. McConnell met with Northern Kentucky Chamber members at 2 p.m. that Friday and announced he will introduce the Emergency Interstate Bridge Safety Fund Act the following week. According to McConnell the fund would provide additional money for interstate bridge construction above what's already in the highway budget (McConnell coming to NKY with plan to pay for bridge, 2014).

The announcement generated a lot of excitement and anticipation in Northern Kentucky among tolling opponents.

At the time Erik Hermes didn't know if McConnell's proposal would win his support. Hermes, a Campbell County resident and president of the Northern Kentucky Tea Party, supported McConnell's primary opponent, Matt Bevin. He's now uncertain whether he'll vote for McConnell or the Libertarian candidate David Patterson. But he does know he doesn't want tolls to pay for the bridge.

"I think it is political theater but my hope is it is a real solution," Hermes said. "This is the first time we've heard McConnell doing anything positive to help fund the Brent Spence. I think people will be swayed by it if it is a real solution (McConnell coming to NKY with plan to pay for bridge, 2014)."

Those who've opposed tolls saw McConnell's new proposal as a vindication of sorts. The opposition to tolls by Northern Kentucky lawmakers has kept the pressure on McConnell and others in the federal delegation to find another solution, said vocal toll opponent Kevin Gordon, president of the Independent Business Association of Campbell County.

"I think the fact that they held steady and kept making the point talking about how 10 states would be affected by this, and the importance of this road to national defense and national security, all of those things resonated," Gordon said (McConnell coming to NKY with plan to pay for bridge, 2014).

Even some Democrats welcomed McConnell's visit and proposal. State Rep. Arnold Simpson, D-Covington, said he welcomes any proposal from Kentucky's federal delegation that could provide federal money for the bridge. Simpson has opposed tolls and introduced legislation to keep tolls off the Brent Spence Bridge.

"There's got to be a mechanism to ensure our roads are safe," Simpson said. "I take this as a positive sign (McConnell coming to NKY with plan to pay for bridge, 2014)."

Unfortunately for tolling opponents McConnell’s plan turned out to be a big disappointment.

McConnell’s Grand Plan

McConnell announced he would introduce in the U.S. Senate the Emergency Interstate Bridge Safety Fund Act. The act would repeal the 1931 Davis-Bacon Act, which established the federal prevailing wage. It requires the federal government pay local standard wages for construction projects. He estimated this would save the federal government $13 billion over the next 10 years that in turn could be redirected to help rebuild obsolete bridges (McConnell, Grimes both offer bridge plans, 2014).

McConnell’s plan faces colossal obstacles in order to be implemented. First, Democrats and labor unions favor prevailing wage and wouldn't likely let such a bill pass the Democratic-controlled Senate. McConnell, however, hopes Republicans will pick up the majority in the Senate this fall, giving them control of both houses, making him majority leader and giving legislation like this a much better chance, he said - though it would not get past President Barack Obama's almost certain veto (McConnell, Grimes both offer bridge plans, 2014).

So let me get this straight, McConnell wants the residents of NKY to vote for him in the Senate election this November under the pretense that Republicans might win the majority of the seats in the senate, and therefore will repeal the prevailing wage legislation? How is this going to get past a veto from Barack Obama? McConnell’s plan is a nonstarter. How gullible does he think the electorate is in NKY?

McConnell's proposal does not automatically cut a check for the Brent Spence Bridge. The Brent Spence Bridge would get preference based on criteria that would allot money based on need and the obsolescence of the bridge, McConnell said.

McConnell didn't reveal the formula or estimate how much the Brent Spence Bridge would get. Whether tolls would be part of the bridge project would still be up to the state and local governments, McConnell said (McConnell, Grimes both offer bridge plans, 2014).

The Grimes Plan

Of course not to be upstaged Democratic candidate and Kentucky Secretary of State Alison Lundergan Grimes’ unveiled her plan to fund a new bridge. Her plan would end some corporate tax deductions that her campaign estimated would generate $75 billion over the next 10 years. Grimes, in a statement, said that money would fully pay for the Brent Spence Bridge with any leftover going to federal deficit reduction.

She proposed closing or limiting five corporate tax breaks:

--limit the corporate tax deductions companies can make by compensating executives in stock options rather than salary

--eliminate the tax deduction that allows companies to deduct the cost of moving equipment overseas

--eliminate the tax deduction that allows corporate jet owners to deduct their investment over five years

--crack down on domestic companies using foreign P.O. boxes to avoid taxes.

--reform the tax code so the "wealthy" can't describe income as business profits to avoid Medicare and Medicaid payroll taxes (McConnell, Grimes both offer bridge plans, 2014).

Although not much more realistic than McConnell’s plan I like the emphasis on ending some corporate welfare and pursuing corporate tax scofflaws. However we need to be careful not incentivize companies to move overseas. We already make it very expensive to do business here with our 35% corporate tax rate. If we are too aggressive with closing those loopholes we could lose jobs.

Mixed Northern Kentucky Reaction to the Two Plans

The reaction the McConnell and the Grimes plans in Northern Kentucky were mixed. The proposals left Covington City Commissioner Steve Frank underwhelmed. He said both proposals stand little chance of passing.

"His chances of getting Davis-Bacon erased is between zero and none," Frank said. "I think at some point there's going to have to be a reset in how we fund infrastructure. The gasoline tax is bringing in fewer and fewer dollars (McConnell, Grimes both offer bridge plans, 2014)."

It’s a very astute observation from Steve Frank. For years now we’ve heard braying from our federally elected officials about how the 18.3 cent federal gas tax hasn’t kept up with infrastructure costs. Plans like these may resolve problems in the short term, but we need to begin looking for alternatives for funding our transportation infrastructure. Otherwise we will be addressing these same issues with another piece of critical infrastructure.

Senator Rand Paul’s Plan

Another well-known Senator from NKY, who is not under the pressure of an election, has a more realistic plan. He told The Enquirer he thinks they're closer to a solution than ever for the Brent Spence.

"We are closer to getting funding right now than we have been in a long, long time," Paul said. "There are now Republicans and Democrats talking openly and I've been the one pushing hardest on this (Rand Paul: ‘Closer’ to getting bridge funding, 2014)."

Both Democrats and Republicans have warmed to the bill he introduced last year to give a one-time corporate tax break for companies to bring the money they've invested overseas back home, Paul said.

He said he's got the support of Senate Majority Leader Harry Reid, D-Nev.

By reducing the repatriation tax rate from 35 percent to 5 percent, Paul envisions a wave of corporate money coming back into the United States, generating tax dollars that will pay for the Brent Spence and other critical infrastructure. Bloomberg reported earlier this year that the largest U.S.-based companies have $1.9 trillion in money parked overseas to avoid taxes and added $206 billion alone to that stash last year.

"In fact, companies are buying companies in Europe and moving completely out of the United States," Paul said. "We want that money to come home."

Paul estimates his proposal could generate $70 billion in revenue for the United States government. Reuters, Bloomberg and other news sources have reported that Reid supports Paul's proposal (Rand Paul: ‘Closer’ to getting bridge funding, 2014).

Conclusion

I have to concede Rachel Maddow has a point. Why can’t the federal government pay for a critical piece of infrastructure that carries an estimated 4% of the U.S. GDP per year? Instead the focus seems to be imposing the cost through tolling on the backs of the NKY commuter.

The plans proposed for funding a new Brent Spence bridge by McConnell and Grimes are unrealistic and detrimental to our economy. I believe Rand Paul’s plan is the best option of the three. It’s realistic and it incentivizes companies to return to the United States and create jobs rather than encouraging them to move overseas. At 35%, the United States has the highest nominal top corporate tax rate in any of the world's developed economies.  Our corporate tax structure is in desperate need of reform because the cost of doing business in the United States is no longer competitive with other countries. It should be no surprise with a tax structure like ours we would be hemorrhaging jobs overseas and Paul’s plan is a step in the right direction.