What Will a Biden White House Mean for Tire Dealers?
What impact will a Joe Biden White House have on concerns that are vital to independent tire dealers? MTD recently caught up with Roy Littlefield, CEO of the Tire Industry Association, to find out. Infrastructure funding and more COVID-19 relief are two of the first issues that Biden will most likely tackle.
Littlefield, who has been in contact with an individual who is working directly with the Biden transition team, discussed possible scenarios and provided some some historical context as to what could happen in the following areas:
“Both sides campaigned” on this issue, but have taken “very different approaches,” he said.
In February 2018, the Trump administration presented its infrastructure plan that called for $200 billion in federal funding and an additional $1.5 trillion of funding to be provided by the private sector. The proposal “included roads, bridges and mass transportation - the typical things - but also everything else: airports, ports, electrical grids... it would have been a major, national overhaul of infrastructure,” said Littlefield.
“Immediately, 39 bills were introduced to Congress and they were introduced to raise money from our sector of the industry,” including a proposed increase on the federal excise tax for truck tires and the reapplication of federal excise taxes on passenger tires and tread rubber.
The Trump infrastructure plan “was kind of dead on arrival. For four years, nothing happened until” recently, when the Senate passed a resolution that included the one-year extension of current surface transportation funding, transferring $10.4 billion to the Highway Trust Fund.
“The Biden transition team has met with members of the Ways and Means Committee and the Senate Finance Committee and they are talking about a five-year, traditional highway funding bill” encompassing a more narrow scope - highways, bridges and mass transit - than the Trump administration’s proposal, and at a much lower cost: $50 billion for the first year and most likely less money required during subsequent years.
“One thing about Biden that is different than Trump is that Biden is a creature of the Senate,” said Littlefield. “He knows the Senate inside and out. And he’s going to be able to reach across party lines, which Obama was not successful at doing and Trump was not very successful at doing.
“As vice president, Biden was the man on Capitol Hill for the (Obama) administration on the Affordable Care Act and he did get some Republicans to vote for that. I think there will be a period of cooperation. And a highway bill might be a bill in which they can show bipartisan support. I think this will be one of the (first) efforts of the Biden administration” to work across the aisle.
“I don’t know if (another relief package) will be out before Trump leaves” the White House this coming January, according to Littlefield.
“I don’t know how focused Trump will be on that. But we have to do something about the pandemic so we can help the economy get back in gear.” (On Nov. 9, Biden announced the formation of a COVID-19 task force, which “will help shape my approach to managing the surge in reported infections, ensuring vaccines are safe, effective and distributed efficiently, equitably and freely, and protecting at-risk populations,” Biden said in a prepared statement.)
More financial relief for small business owners is critical, said Littlefield. “We worked with the Trump administration in making sure our members were classified as essential” during the early days of the pandemic “and in getting loan programs out. I hope that is something we can work together on.”
Littlefield doesn’t expect the Biden administration to roll back tariffs on tire and auto part imports from China. (TIA, for the record, will continue to maintain its traditional position of neutrality on tariff-related issues, he said.)
“You have to remember, it was Obama who put the tariffs in...at the request of the union. Typically, Democrats have supported tariffs and Republicans have opposed them. Whether or not tariffs have been successful depends a lot on who you talk to. My gut feeling is that Biden is probably going to support tariffs.”
The estate tax
Based on information relayed by Littlefield’s source, it appears that the Biden administration wants to lower the estate tax exemption to $3.5 million, while increasing the taxation rate to 45%.” (The top federal statutory estate tax rate in 2019 was 40%.)
Littlefield said TIA will continue to oppose the estate tax, which he noted “is something all small businesses feel strongly about. They want to pass their businesses onto their children and families, and a lot of times simply can’t afford that because of the estate tax.”
Making sure that all tire retailers - whether online or brick-and-mortar - are treated the same “is becoming a bigger issue. We have always supported bills to make sure that it’s a level playing field. If you’re a brick-and-mortar store in a small town, why should you be put at a competitive disadvantage?
“Typically, the Democrats have supported the equal distribution of those taxes and the Republicans have opposed it. You would think (brick-and-mortar dealerships) would have a more sympathetic ear in the new administration.”
Managing health care costs
“Our members - more than any other small business people that I know of - provide health care insurance for their employees. When I go to state association conventions, there are general discussions asking, ‘What is your biggest concern as a tire dealer?’ And inevitably, it’s the high cost of health care.
“Trump wants to blow up Obamacare and start over, but we don’t know what his proposal is. Biden wants to keep (the Affordable Health Care Act) and expand it. Legislation will be composed to create a public option in the marketplace that relies on Medicare with no co-payments. The option will be made available to individuals, instead of to employee-provided plans,” and also to individuals who fall below the poverty line.
“The Supreme Court is going to vote very shortly on whether to keep” or strike down Obamacare, said Littlefield. “That’s going to be a huge issue for TIA members. We’re going to take a hard look at that.”
“I don’t think Republicans will go for a lot of spending" on any issue, said Littlefield.
And you can’t ignore President Trump’s ongoing influence, he added.
“A lot will be determined” by the Senate run-off election in Georgia less than two months from now. “I think it will be an interesting race. It could (produce) a 50/50 split.
“What we’ve heard on the ground in Georgia is that if Trump goes down there and campaigns, the Republicans will have a good chance of winning. If Trump doesn’t campaign, it will be very difficult for them. Trump has a huge following. What he decides to do is going to make a difference.”
Regardless of election outcomes, TIA will remain focused on serving the interests of all of its members, according to Littlefield. “I can remember back when Jimmy Carter was elected. I was with the National Tire Dealers and Retreaders Association (NTDRA). There was a lot of angst among NTDRA members. A lot of them were upset.
“We have to support those issues we can work together on and dig in on those issues we have to be concerned with. Some issues will be the same,” Trump administration versus Biden administration, he added.