Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”

Chamber members:

The Roundup is back after a week off for some catching up and time off. Thanks to all that supported our New Orleans North event, our AABA Gala, and tonight’s CWW Sip into Summer! It’s been quite busy around here.

Read below on the most recent news to stay updated with ongoing issues.

*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*

Gas Tax Holiday
President Joe Biden called for suspending the federal gasoline tax, in his latest bid to curb rising fuel prices, though it stands almost no chance of passage in Congress. Biden asked lawmakers to pass a three-month pause on the federal 18-cent-per-gallon levy, casting the proposal as a temporary measure that would provide relief to Americans without harming the road-building projects the tax traditionally funds.

The president also urged individual states to suspend their own gas taxes during that period, or seek ways to offer similar discounts from high prices at the pump. It’s a reflection of the intensifying political pressure on a White House combating near-record levels of inflation.

“A federal gas tax suspension alone won’t fix the problem we face,” a senior administration official told reporters Tuesday night. “But it will provide families a little breathing room.”

Biden’s gas tax holiday, however, has already been met with skepticism from senior Democrats in the House. Speaker Nancy Pelosi and others have questioned whether the policy will lead to savings at the pump, rather than excess profits for gas companies. Democrats chose not to include it in their own bill aimed at lowering gas prices last month.

The White House estimates that a three-month suspension of the tax would cost the trust fund $10 billion, which officials said could be offset through other unspecified revenues.

Political leaders, who have little ability to quickly fix the root causes of high prices, often turn to tax holidays as a way to show constituents that they are taking action. Although consumers might doubt it, oil-market analysts and economists have consistently found that gasoline stations do pass on at least some of the savings.

Economists and policy makers attribute high gasoline prices to robust demand from U.S. consumers, the war in Ukraine and related restrictions on Russian oil, and constraints at U.S. refineries that have reduced capacity by nearly a million barrels a day since 2020.

President Biden has urged U.S. oil refiners to expand capacity, but that would take time to have an impact. For now, refiners are running near their upper limits, according to the Energy Department. Meanwhile, many oil-producing nations are pumping at close to full capacity. That leaves a federal gas-tax holiday as the one thing Washington could do. Any suspension in the federal tax would require Congress to pass legislation.

At a news conference in Toronto on Monday, Treasury Secretary Janet Yellen said studies of gas-tax holidays at the state level have shown much of the tax relief is passed on to consumers. She said of a federal tax holiday that “while not perfect, it is something that should be under consideration.”

For the first time, a gallon of regular gas now costs $5 on average nationwide. That’s bad news for employers, on many accounts, especially if they’re looking to get workers back into the office. Energy experts estimate that every penny increase in the price of gasoline costs Americans an extra $4 million a day. With inflation driving up the costs of food and housing, Americans are already feeling strapped for cash.

A recent string of troubling inflation reports leads Federal Reserve officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week.

Faced with rising chances of aggressive monetary tightening by the Federal Reserve, investors have broadly unloaded risk. The S&P 500 slumped 3.9% as 495 of its 500 components ended last Monday lower—declines that left the benchmark down more than 20% from its January record, sending it into a bear market for the first time since 2020. The Dow industrials shed 2.8% and the Nasdaq Composite 4.7%. The prospect of bigger, faster Fed moves sent government bond yields surging. The sharp investor retreat from government bonds recently reflects deepening gloom over the outlook for markets.

A drop in cryptocurrencies accelerated after interest-rate fears sparked a weekend selloff. Bitcoin fell below $23,000 before paring its losses to trade above that level. Shares of Coinbase Global fell 11%, while Celsius Network said it was pausing all withdrawals, swaps between cryptocurrencies and transfers between accounts, citing “extreme market conditions.” Plunging cryptocurrency prices are starting to throw a wrench into the plans of firms that deal in bitcoin and related areas, amplifying the impact of an already brutal market retreat.

The median existing-home sale price in the U.S. shot above $400,000 in May, setting a record, as the housing market stalled under the weight of higher mortgage-interest rates.

The Next Shortage: Electricity?
As the summer season kicks off and people seek to cool down indoors, concerns over electric grid reliability are heating up. A recent assessment of summer electric grid reliability shows the clean energy transition may be getting ahead of the technologies available to keep the grid reliable.

Last month, the North American Electric Reliability Corporation (NERC) released its 2022 Summer Reliability Assessment, which was well timed as some of the highest daily temperatures of 2022 welcomed the summer cooling season. In a startling revelation, significant portions of the country are now either at a “high” or “elevated” risk of electric power shortfalls during either above-normal or even normal peak summer electricity demand.

Illinois Primary Election
With less than a week before the June 28 primary, voter turnout appears to be abysmal. According to data from the Illinois Board of Elections, 140,399 Illinois residents have voted so far. That will continue to go up with early voting and as mail-in ballots still come in. The election board reports 308,258 ballots were requested by mail.

“Early numbers indicate vote by mail for the June 28 primary is on a good pace to surpass previous early voting records,” the State Board of Elections’ Matt Dietrich said in regard to requests for ballots. The big question: Will those ballots be returned?

In the 2018 midterm primary, 2.1 million total votes were cast, according to the elections board. And in 2014, 1.36 million total votes came in. Unless voting picks up, we could be looking at a low-turnout election.

State lawmakers moved the usual March primary to June while they were trying to sort out redistricting issues. Population and demographic data from the 2020 census was released later than usual, which delayed redistricting. That created a domino effect of delaying candidacy filings and petition gathering.

CATERPILLAR Announcement
Machinery manufacturer Caterpillar, the company that’s called Illinois its corporate home for 97 years, is moving to Texas. Caterpillar will move its approximately 230 corporate employees to Irving, Texas, beginning this year, while the move won’t affect approximately 17,000 other employees of the company who work in Illinois, according to coverage from Bloomberg.

The corporate offices are currently in Deerfield, having moved there from Peoria in 2017. Peoria is still the site of 12,000 Caterpillar jobs.

“We believe it’s in the best strategic interest of the company to make this move, which supports Caterpillar’s strategy for profitable growth as we help our customers build a better, more sustainable world,” Caterpillar Chairman and CEO Jim Umpleby said in a statement, according to the Chicago Tribune.

Spokeswoman Kate Kenny said in an email to Bloomberg, “We believe being in the Dallas-Fort Worth market will give us the ability to attract new talent and provide additional career opportunities for our current employees to aid in retention.”

Caterpillar follows Boeing in moving corporate offices from Illinois, as the aerospace company announced a move to Arlington, Virginia, in May.

Governor Pritzker, in a statement, called the latest news “disappointing,” claiming the state continues to “be a leader in attracting large and midsize corporate relocations.” At the Ferrero event Monday, Pritzker touted recent business expansions from Boeing, Chicago Magnesium Casting Co., electric car manufacturer Rivian, Discover Card and Lion Electric.

“It’s disappointing to see Caterpillar move their 240 headquarters employees out of Deerfield over the next several years when so many companies are coming in,” he said in a statement. “We will continue to support the 17,400 Illinoisans who work for the company in East Peoria, Mapleton, Mossville, Pontiac and Decatur – which remains Caterpillar’s largest manufacturing plant in North America after the company’s recent expansion. My administration will continue to drive job growth throughout the state, making clear to the world why Illinois is the best state in the nation to live, work, play and do business.”

At Monday’s event at Ferrero, Pritzker praised Illinois’ highly trained workforce, central location and transportation infrastructure, “all of which make our state a great fit for companies doing business and moving products all around the world.”

As for his administration’s business-related policies, he pointed to an expansion of the manufacturers purchase credit, an extension of R&D and EDGE tax credits and a business apprenticeship tax credit.

He also cited a lowering of the corporate franchise tax as a benefit to companies. It’s a far cry from his Fiscal Year 2022 budget push, which reversed a planned phasing out of the franchise tax that was included in his bipartisan Fiscal Year 2020 budget. Last year, he called the phaseout a “corporate tax loophole.”

The FY22 budget capped a tax credit at $1,000, where it remains under current law, overriding what would have been a $10,000 credit in the current year and $100,000 next year before a phaseout in 2024.

Auditor general reports about $2 billion in fraudulent pandemic unemployment claims
A state audit released Thursday found nearly $2 billion in federal money intended to help unemployed Illinoisans during the pandemic was lost to fraudulent claims in Illinois.

The Illinois Department of Employment Security blamed “insufficient and flawed federal guidance” and a lack of controls on a hastily constructed program put together by the Trump administration.

The federally-funded Pandemic Unemployment Assistance program provided up to 39 weeks of benefits for unemployed individuals who ran out of regular unemployment benefits and for self-employed individuals, gig workers and others not eligible for regular unemployment.

The report released Thursday by Auditor General Frank Mautino covered much of the life of the program, July 2020 through June 2021. In the early days of the pandemic, amid business shutdowns and high unemployment, states struggled under a crush of claims from those laid off during those shutdowns. Amid the volume of claims, IDES was forced to try to weed out the fraudulent claims while under pressure to get money into the hands of the recently unemployed.

The Pritzker administration has said the PUA program was designed hastily and does not give employers an opportunity to challenge fraudulent claims because the type of workers applying for benefits do not technically have employers. The PUA program also eliminated existing controls, including income and employment verification, according to a statement by IDES.

Much of the fraud, up to $163 billion estimated nationwide, involved identity theft. Scammers filed unemployment claims using false identities and then had the payment method switched from the debit cards that people receive when they qualify for benefits to direct deposit into an account accessible by them.

The audit found that, of the $3.6 billion in PUA paid out from July 2020 through June 2021, nearly $1.9 billion was found to be fraudulent, mostly due to identity theft. “Overpayments associated with identity theft and traditional fraud within the PUA program was unprecedented and resulted in fraudsters using highly sophisticated techniques to take advantage of the current economic condition created by the COVID-19 pandemic,” the audit stated.

The audit found IDES:

* Failed to implement general information technology controls over the Pandemic Unemployment Assistance.

* Failed to maintain accurate and complete pandemic unemployment assistance claimant data.

* Failed to perform timely cash reconciliations.

IDES responded that the system used to manage the PUA program is independent of the system used to manage regular unemployment benefits. From the beginning of the pandemic in March 2020 through the end of 2021, IDES stopped $40 billion in fraudulent payments from both state and federal programs, according to the agency’s statement.

Republicans are calling for hearings related to IDES’ handling of the programs and, specifically, whether the agency failed to follow federal recommendations for fraud prevention tools made available before the pandemic.

“The Pritzker administration and IDES have refused to disclose the extent to which fraud affected our unemployment system and this audit makes abundantly clear why,” said Rep. Tim Butler, R-Springfield, said in a statement. “The loss of nearly $2 billion, more than half the funds for the PUA program, displays an unprecedented level of negligence by the administration and IDES management. Blaming the previous president’s administration is an unacceptable excuse and we need immediate hearings to get to the bottom of this failure.”

Washington Must Take Action on Inflation
Last week, we learned inflation rose an astonishing 8.6% in May, hitting a 41-year high. Inflation is the number one problem facing families, employers, and our economy, but elected leaders are not doing what needs to be done.

“We know there are things we can do right away,” U. S. Chamber President and CEO Suzanne P. Clark told CNBC’s Squawk on the Street, last Friday.

  • Lower tariffs, which are taxes on American families and businesses. Cut tariffs and help Americans save money on everything from manufacturing inputs to summertime goods.


  • Increase oil and gas supply. American energy can reduce costs for consumers at home and allies worldwide. But this requires long-term planning and infrastructure. We need a new 5-year leasing plan and approval of pipelines and export facilities.


  • Address the worker shortage. We have 11.5 million open jobs. We need to double legal immigration and help expand affordable childcare options for families.

Bottom line: As the Fed deals with the demand side, only the White House and Congress can address the supply side, and they need to get started.

Stay well,

Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
815.727.5371 main
815.727.5373 direct