The Arizona Chamber D.C. Fly-In, which was attended by over 20 board members gave us insights that we will rely on to best position Arizona for the new political order.
We met with our two senators, John McCain and Jeff Flake, and Representatives Franks, Gosar, Schweikert, McSally, Biggs, O’Halleran, and Sinema. We also were greeted by Colorado Sen. Cory Gardner and veteran Ways and Means Committee member Rep. Erik Paulson (R-MN).
The meetings also included keynotes from the leading think tanks in Washington that are driving the policy development process, including the Heritage Foundation, the American Enterprise Institute and the Woodrow Wilson Center’s Mexico Institute.
The meetings centered on the path forward on healthcare, trade, water and regulatory reform. We also had a track on a core Arizona manufacturing industry, aerospace and defense, with an excellent overview of the key defense issues by MacKenzie Phillips of AEI.
Here are some key takeaways:
Obamacare replacement
There is a lot of uncertainty over what will ultimately replace Obamacare. You’ve heard the magic words of repeal and replace. Now the term repair is creeping into the discussion. Our delegation understands the gravity of getting this transition right. My guess is that you will see a process that allows for a more careful consideration of alternatives than what may have been expected right after the elections.
An expert in this area, Katie Mahoney of the US Chamber, gave our group an insider’s peek into the debate, solidifying the US Chamber’s reputation as the go-to business association on the top issues of the day.
Regulatory reform
The greatest area of immediate positive action is in the area of regulatory reform. The past administration went way, way over the top. Start with the EPA regulations on the Clean Power Plan, the navigable waters definition change under the Clean Water Act, or the impossible-to-meet ozone rule.
On the employment front, the Department of Labor’s very expensive overtime rules has all employers on edge. The efforts to permit quickie union organizing elections did not help, nor did the soapboxing for a higher national minimum wage.
The Dodd-Frank regulations, including the new bureaucracy of the Consumer Financial Protection Bureau, have created all sorts of problems in the lending area. There were rules by SEC regulating retirement accounts. And the US Department of Education’s gainful employment rules have created angst and disruption in the for-profit education sector.
There is much that can and will be done through the executive branch to roll back the previous administration’s stunning overreach.
Congressional legislation is also very important to ensure against future abuses. The two big laws pending are the REINS Act, and the first substantive reform to the Administrative Procedures Act since the 1940s. We were fortunate to have one of the top regulatory experts in the country, William Kovacs of the US Chamber, visit with us.
Tax reform
When it comes to tax reform, I feel comfortable to report that a major tax reform will occur this year. What we will almost certainly see is a dramatically reduced top rack rate for our corporate taxes.
The US having the dubious distinction of being home to the highest corporate tax rate in the country is harming our competitiveness. Something significant is also likely in terms of reducing the tax liability for small businesses that file under the individual income tax code; there will be some sort of simplification. But major battles will burn for a while on some of the popular deductions and the thorny issue of border adjustability.
Trade and our relationship with Mexico
On trade, we are lucky that we have the two most pro-free trade senators in Sen. McCain and Sen. Flake. Both understand and have the ability to help as NAFTA undergoes its first serious scrutiny in 23 years. Both are fine with updating the agreement but are forceful in their view – correctly – that the agreement has been enormously valuable for Arizona and should be preserved.
I also had the opportunity to visit with the North American head of ProMexico, Mexico’s foreign investment promotion arm, to discuss the importance of trade. ProMexico established an office in Phoenix about one year ago, showing the importance of the Arizona market.
I also was invited to meet with Ken Smith in the Embassy of Mexico to discuss trade. Again, the leadership of our senators in trade was recognized and appreciated.
We also had excellent presentations on the US-Mexico relationship from the Mexico Center at the Woodrow Wilson Center. Duncan Wood, the Center’s director, gave us a detailed review of the relationship with Mexico and insights on where NAFTA negotiations may go.
The former US ambassador to Mexico, Anthony Wayne, also addressed us. Ambassador Wayne’s tenure opened up new avenues of collaboration, including in the education, research, cultural and security spaces.
Arizona’s own Leah Campos, now a senior adviser on issues related to North America for the House Foreign Affairs Committee, provided a congressional perspective on trade.
The bottom line: many of our friends in Congress understand the importance of trade with Mexico and are committed to defending it.
