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What the Nov. 2 election results mean to the automobile industry

November 23, 2010
The president wore coattails. Besides President Bush capturing a second term Nov. 2, he saw the Republican majorities increase in the Senate and House. For dealers asking themselves "What does this mean for me and my business?" the American International Automobile Dealers Association presents an analysis. Tax Reform Taxes, particularly tax reform, will be a major focus in the 109th Congress with a GOP majority. The AIADA predicts Bush's series of tax cuts will not be rolled back on upper middle class Americans. Republicans have called this year for an overhaul of the U.S. tax system, and momentum is gaining on both sides of the aisle. Talk is centering on scrapping the income tax and replacing it with either a national sales tax or a flat tax. With GOP majorities in both houses, the federal estate tax could be eliminated. Congressmen favor it by a wide margin, but it could prove challenging to find the 60 Senate votes necessary for repeal. CAFÉ Fuel economy standards is an issue that both parties are examining. Because of the country's heavy dependence on foreign sources of oil, raising CAFE is politically popular in some states. Even Bush suggests changes. The NHTSA, with approval from the White House, recently proposed the largest CAFE increase in 20 years by ruling that light trucks set standards for light trucks that rise from 21.0 mpg in model year 2005 to 22.2 mpg in '07. With Republican majorities in both houses, CAFE is unlikely to be on the front burner, and any increase would likely be gradual. A GOP majority suggests that any decisions on CAFE would be made by experts at the NHTSA and not Congress. CAFE is not strictly a partisan issue, however. Sens. Carl Levin (D-Mich.) and Kit Bond (R-Mo.) attached an amendment to last year's energy bill that would leave decisions to increase CAFE standards to the NHTSA. But Sen. John McCain (R-Ariz.) called for a 35 mpg across-the-board increase. The Republican stronghold likely will hold the line on the CAFE increases. Healthcare The GOP majority, led by Senate Majority Leader and doctor Bill Frist (R-Tenn.), will try to pass healthcare reform, specifically medical liability and associated healthcare plan (AHP) legislation. House Bill 4281, which would allow small businesses to take advantage of AHPs, has been passed in the chamber six times. The bill's Senate version, S. 545, has not been called for a vote. With three four more GOP senators, AHPs likely will be called for a vote.