(GREENBELT, Md.–March 6, 2018)–With talk of tariffs and trade wars making headlines as they spoke, Maryland’s Congressional senators and representatives gave nearly 200 attendees a sense of what’s ahead from Washington for the state’s business climate Tuesday night at the Maryland Chamber’s annual Congressional Delegation Dinner in Greenbelt.
It’s one thing, they said, to want free and fair trade. But slapping tariffs on steel and aluminum could bite back at Maryland’s port, its supply chain, manufacturing, and more.
“American products shipped out of the Port of Baltimore will be put at competitive disadvantage with their competitors from around the world who are not paying a 25-percent tariff on the steel they are using,” said Senator Chris Van Hollen. “There’s a whole lot of steel and aluminum in these [Mack] trucks [built in Maryland], and it is going to significantly increase the price of the trucks. That means things are going to be more expensive in the U.S. market for anybody hauling goods and certainly their exports to other parts of the world.”
The tariff talk was just one of several topics in the discussion the Maryland Chamber hosts every year. While Reps. Delaney, Brown and Cummings sent regrets for scheduling conflicts, and Rep. Jamie Raskin was sick, the remaining delegates joined again for a wide-ranging conversation with the Maryland Chamber’s economist of record, Daraius Irani, Ph.D. Irani is the chief economist with the independent Regional Economic Studies Institute at Towson University.
Chief among any employer’s concerns is finding talent that’s ready to work on Day One. January’s State of the Union address included a call for apprenticeship and training programs. The question for employers, of course, is one of details.
“[Labor] Secretary [Alexander] Acosta was in front of our subcommittee today and specifically mentioned apprenticeship programs,” said Rep. Andy Harris, “because it’s a goal of the administration to expand the number of apprenticeship programs they asked for in their budget. They also have another idea, which is to create a second type of apprenticeship program that does not receive federal funding under [the Workforce Innovation Opportunity Act], but has much less red tape. They think that could even double the number of apprenticeships.”
Harris, an anesthesiologist who represents Maryland’s 1st Congressional District, also said it’s important to consider the effect of opioid addiction on the workforce and mitigate it—a topic he said Sec. Acosta also addressed.
Sen. Ben Cardin said immigration is a factor in Maryland’s workforce, as well.
“We’ve heard from different areas in our state the critical need not only to continue, but to expand the employment visa programs,” Cardin explained. “We are having good discussions about this, but right now we’re sort of stuck on the immigration issues without trying to resolve it. We really do need to resolve it.”
Beyond the political hot-button issues, basic education and opportunity are also bright on the radar. Workforce investment is critical for Maryland, where federal contracting jobs keep a significant percentage of people employed, especially in cyber security fields.
“We need to work in our delegation to make sure we can justify these federal jobs, and then we can maintain these federal jobs,” said Rep. Dutch Ruppersberger.
Van Hollen highlighted how much the federal government contributes to the state’s economy.
“If you look at the amount of federal investment on the state basis, we come in No. 4 after some very big states like California, Texas, and then Virginia,” Van Hollen pointed out. “We come in No. 3 in the country in terms of the per-capita federal investment in goods and services.”
Ruppersberger noted that there is significant bipartisan investment in the federal budget for civil and military defense, which will help shore up the Maryland economy.
As always, education led the way in workforce development discussion, but Minority Whip Steny Hoyer and Van Hollen both said we need to reduce emphasis on four-year or advanced degrees and increase opportunities for skills training like trades.
“That is the kind of thing that we need to pursue if those who are struggling in our economy—and there are too many of them, even at 4-percent unemployment—need those skills,” Hoyer said.
“You do not need to have a four-year college degree to be very successful in America,” he continued, “and we ought not to have a lot of people in America who are not interested in going to college believe they are therefore failures.”
Maryland is within an overnight drive of a third of the American population, making it prime real estate for makers and distributors, as well as imports and exports. It also has major infrastructure and transportation needs that threaten to slow or stall the flow of commerce. Federal funding for projects like widening I-81 and the still-hoped-for double-stacking of the Howard St. tunnel in Baltimore could be the boost the state needs to keep things moving.
Cardin, who is the ranking Democrat on the Senate Environment and Public Works Transportation and Infrastructure Subcommittee, called infrastructure an “extremely high priority” for the delegation. But he cautioned that the administration’s transportation plan—the one touted as a $1.5 trillion project—flips the funding burden.
“The new initiative provides new categories for priorities,” he said. “It puts a reward on states that are willing to pay a higher percentage. It used to be 80-percent federal, 20-percent state. They want to change it to 80-percent state, 20-percent federal.”
Given that inversion, Cardin said, he does not believe the initiative will get through Congress.
“We are looking for a new initiative at the federal level that will allow these types of programs to be funded,” he said.
In addition to that challenge, there is an ongoing struggle to fund public transit, and particularly the DC-area Metro system that gets millions of people around the region each day. Maryland could wind up contributing more than $100 million to fund WMATA in the near future, even as the system fights to get out from under maintenance and reliability issues that have plagued it for years. As that state-level question bubbles, there are also questions of how much federal lawmakers will pledge.
“Our general managers made it clear that every transit system in America has a funding source on which it can rely, except the Washington Metropolitan area transit system,” said Hoyer.
Ruppersberger, who sits on House Appropriations, says infrastructure and transportation issues need to re-emerge as high priorities at the state and federal levels. He cited the commute he and Harris take every day down the I-95 corridor, a two-and-a-half-hour ride, one way, in morning traffic.
“Infrastructure creates jobs,” he said. “We’re going to have to deal with this issue. [Interstate] 295, can we widen it? We’ve got to grow. We have NASA there, we have [the National Security Administration], we have people going to Washington. We’re going to have to re-evaluate our whole transportation system.”
The much-discussed tax changes under the Trump administration seem to benefit companies in general, cutting the corporate tax rate significantly. Minority Whip Hoyer pointed out that competition is the main reason for the Maryland delegation’s bipartisan support for corporate tax reductions.
“When we adopted the corporate rate, we were essentially competitive with our industrial competitors around the world,” Hoyer said. “Since then, they have substantially reduced their rates and we have not.”
In particular, businesses that operate as pass-through entities can see benefits. Pass-through entities avoid double-taxation by treating corporate income as individual personal income divided among owners and taxed at only that rate.
The trick for some business owners is how to become a pass-through entity.
“It’s not clear how that’s going to work with different types of business, and whether you can restructure your business to take advantage of the 20-percent deduction,” said Cardin, who is also assigned to the Senate Finance Subcommittee on Taxation and IRS Oversight. “That’s going to be a matter of considerable interest in the United States Internal Revenue Service. So we’re going to meet with the small business community to see how we can implement the 20-percent deduction, but we know there is going to be need for additional attention by the Congress in fixing that particular aspect of the bill.”
Taxes were among the first topics Harris addressed in opening remarks, singling out BGE as one of the major companies that has reduced costs to consumers, giving back its entire break—which BGE now estimates at $103 million—to its customers.
Harris touted the tax plan’s advantage for small business and families, connecting the two.
“The Tax Cuts and Jobs Act puts more money in the pocket of our Maryland families and small businesses,” he said. “In fact, the average family of four in Maryland saw an average annual tax cut of $3,200.”
With three members of the delegation sitting on finance- or banking-related committees, the discussion about regulation naturally turned to lenders. The post-2008 Dodd-Frank Act is up for discussion in the Senate, in part because it may be too stringent on smaller banks. Cardin, who sits on the Senate Appropriations Small Business Subcommittee, said he plans to work with its chair, Sen. James Risch of Idaho, to look at regulatory relief for those banks. Sen. Van Hollen, on the Senate Banking, Housing and Urban Affairs Committee, pointed out that Old Line Bank shouldn’t have to face the same restrictions as big institutions. It makes it much harder for those banks to lend to businesses and entrepreneurs.
“I agree with Jim [Cornelsen, president of Old Line Bank],” Hoyer said. “We are, in too many instances, treating small banks and medium-sized banks as if they were J.P. Morgan Chase, and that’s not rational.”
On the whole, Maryland’s delegation tends to believe regulation is necessary for fair dealings and the health of the community, but it requires sensible approaches.
“We need to make sure that rules and regulations are in fact fair and conducive to good business, and not an impediment to good business,” said Hoyer.
“One thing I’ve seen in the Trump administration that I respect to a degree is doing away with some of the regulations that drive everyone crazy and they don’t really have anything to do with the end game, whatever the end game may be,” he said.
The discussion, which was rarely contentious even in disagreement, ended with perhaps the most controversial question of the night: Orioles or Nationals? It sparked pragmatism from Ruppersberger, who said he’s an O’s fan at heart, but the Nats have a better shot.
The minority whip took a more campaign-friendly approach.
“Some of my friends are Orioles fans, and some of my friends are Nats fans,” Hoyer said. “And I’m with my friends.”