WASHINGTON — With the GOP still basking in its Tuesday election victory that gave the party control of the House and Senate next year, the fashion industry was left to ponder how its fortunes might be bolstered, given the new political landscape.
President Bush’s business tax-cutting plans could pick up steam next year in Congress, but his ambitious trade-expanding agenda is still expected to face roadblocks, particularly in the textile and apparel arena.
“I don’t think the dynamics of textile politics has changed,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, which is angling for more apparel import liberalizing agreements.
On the other side of the trade fence, Jock Nash, the Washington counsel for textile giant Milliken & Co., said he can’t forecast how a GOP-controlled Congress will vote, and added, “If someone got a mandate for free trade out of this election, I didn’t see it.”
For businesses anxious for tax breaks — even in a sluggish economy, the Bush administration has indicated some will be proposed — a GOP-controlled Congress could spell passage. On top of the President’s tax agenda is a request for Congress to make permanent a $1.3 trillion tax cut passed in 2001, which would expire in nine years. This would include elimination of the inheritance tax.
Retailers, in particular, would like to see Congress pass a store renovation tax credit for tenants and accelerated depreciation for computers and other equipment. With the GOP in charge, “generally what it means is we have a much more business-friendly Congress and that’s good for the economy, stock market, consumers and retailing,” contended Tracy Mullin, president and chief executive officer of the National Retail Federation.
Meanwhile, restoring good health to the ailing domestic textile industry remains a hot political issue for several Southern GOP lawmakers, as it was before the election and during several contentious House and Senate races. Their promise to voters: to oppose any trade pact or bill that could negatively affect U.S. mills.
It’s a broad commitment, but one that could be at odds with the President, as his administration negotiates free-trade pacts and then sends them to Capitol Hill for approval, like one in the works to create a Western Hemisphere free-trade zone.
Gone from the Senate lineup are fierce textile-industry protectors, GOP Sens. Jesse Helms (N.C.) and Strom Thurmond (S.C.), who are retiring. The two longtime politicians were famous for joining forces with Sen. Fritz Hollings (D., N.C.) to use Senate rules to block or change import-liberalizing trade bills. In their place come January will be Republicans Elizabeth Dole for North Carolina and South Carolinian Lindsey Graham, a former House member.
Still in place are several House GOP lawmakers from textile-producing states who’ve agitated against import-liberalizing bills, even if they require apparel being given duty-free treatment to be made with all or some U.S. textiles. Such stalwarts who could likely be at odds with Bush on trade include Reps. Howard Coble (R., N.C.) and Charles Norwood (R., Ga.), who sailed to re-election.
Ones to watch are GOP textile-state House members like North Carolina Reps. Robin Hayes and Cass Ballenger, who were re-elected after nasty campaigns where their opponents painted them as selling out the textile industry. Both Ballenger’s and Hayes’ votes were key to securing congressional passage of a bill renewing the President’s ability to negotiate more trade-liberalizing deals, a power the White House calls Trade Promotion Authority.
Hayes and Ballenger said they went against industry’s wishes in supporting TPA in exchange for Bush administration promises to help the industry, like pressing foreign countries to open their markets more to U.S.-made fabric and yarn.
“Will Robin Hayes and Cass Ballenger be problems in the future?” pondered the AAFA’s Burke. “Yes, more than likely, as far as our agenda.”
The President, too, has reason to stand by the domestic textile industry, since he campaigned this election for GOP lawmakers in the South on a textile-friendly agenda. Bush also stands for re-election in two years and the South is expected to be a key battleground.
The White House “has got two short years to make it all work before the next presidential election,” Milliken’s Nash said. “In this town and in this business, you can be king for a day and a goat the next day.”
Bush, like his Democratic predecessor, Bill Clinton, has maneuvered trade legislation through Congress with the help of a core group of Democrats and a more substantial bloc of free-trade-minded Republicans.
“It would be a mistake for the Republicans to take this as some sort of a mandate on their economic policies, including trade,” said Karl Spilhaus, president of the National Textile Association. “Given all the mill closings and the state of the economy, I would hope not.”
Robert DuPree, associate vice president of government relations with the American Textile Manufacturers Institute, said association officials are still sorting out implications of the election for textiles, but he expects the industry’s health to remain a pivotal political issue. “We are confident our issues will be on the front burner” of newly elected textile-state lawmakers, he said.
In January, when the 108th Congress is sworn in, it will be the first time in 50 years that Republicans will have control of the White House, Senate and House. This means the President will get an automatic airing of his proposals, since the GOP will control the House and Senate agendas and nominate committee chairmen. Now, the GOP enjoys this power only in the House.
With results from four races still pending, Republicans this election increased their five-seat House majority over Democrats to 23. In the Senate, Republicans are assured of at least 51 seats to the Democrats’ 49. One of the Democratic Senate seats, in Louisiana, is the subject of a December runoff. Currently, Democrats hold a one-seat advantage over Republicans in the Senate.
Even with a GOP majority in the Senate, getting controversial legislation passed is still problematic, including trade. In order for a bill to face a Senate vote, 60 senators must agree to end debate, a standard that is often reached with deals to change legislation. However, when negotiated trade agreements are brought for a vote under TPA, changes can’t be made.