Government Affairs & Public Policy
Election Recap Summary of Results Republicans won a majority of seats in the Senate on Election Day, expanded their majority in the House to the largest they’ve held since Harry Truman was President, and won some of the most closely contested governors’ races across the country. Republicans took a strategic chance during this election cycle. Rather than laying out a blueprint of policy goals they would collectively push if elected, they ran against President Barack Obama’s record and turned local races into a national referendum on his presidency. In spite of conventional wisdom that campaigns need a competing positive agenda, this underlying strategy won the day resoundingly. But it is not clear voters favor Republican policies. That could be the case, but it may turn out that the strategy of running against the President was a good strategic match with the nation’s foul mood. The Republican gains will substantially alter the President’s final two years in office, while also setting the stage for the 2016 presidential election. In recent weeks, the election transformed from a series of tight races in which Republicans were favored because Democrats had more Senate seats to defend (particularly in states where Republicans were strong) to a transformative race in which nearly every race broke in favor of Republicans. Most races that were expected to be close went to Republicans, and many Republicans won by greater margins than anticipated. President Obama has invited a bipartisan group of lawmakers to the White House on Friday to talk about how to move forward governing the country following the election results. Though the invitations were made before the extent of Republican victories was apparent, the President will now need to use the opportunity to build working relationships with Republican leaders of the House and Senate. The vote made clear that Americans disfavor partisan Washington fights and want policy solutions to deal with their concerns – and they laid responsibility for recent gridlock in Washington at Democrats’ doorstep. Whether their newly elected leaders are able to fulfill those hopes remains to be seen.
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Table of Contents
Senate Results House Results Gubernatorial Results
Congressional Leadership Expectations Committee Expectations
House Expectations Senate Expectations
Legislative Expectations for the Lame-Duck Session of Congress
Continuing Resolution NDAA Tax Extenders Terrorism Risk Insurance Act (TRIA) Authorization Other Issues
Legislative Expectations for the 114th Congress
Tax/Fiscal Policy Government Funding Healthcare Data Security Cybersecurity Privacy Immigration Reform Financial Services Energy Telecommunications Transportation Trade Patent Reform
(Caucus with Democrats)
*Results in Alaska and Virginia remain too close to call. Louisiana will hold a run-off election on December 6.
The vote percentages below are as of 7 a.m. on November 5 and the percentage under the name of the state indicates the percentage of the votes that had been counted at that time. Seats projected to be won by Republicans are in red and projected Democratic wins are in blue. The names of incumbents are in italics.
Mark Begich (D)
Dan Sullivan (R) (With 97% reporting)
Mark Pryor (D)
Tom Cotton (R)
(With 96% reporting)
Mark Udall (D) Cory Gardner (R) (With 92% reporting)
Michelle Nunn (D)
David Perdue (R)
(With 100% reporting)
Bruce Braley (D) Joni Ernst (R) (With 100% reporting)
Greg Orman (I) Pat Roberts (R) (With 100% reporting)
Alison Lundergan Grimes (D) Mitch McConnell (R) (With 100% reporting)
Mary Landrieu (D) Bill Cassidy (R) (With 100% reporting)
Jeanne Shaheen (D)
Scott Brown (R)
(With 88% reporting)
Kay Hagan (D)
Thom Tillis (R)
(With 100% reporting)
Mark Warner (D)
Ed Gillespie (R)
(With 99% reporting)
Republicans won most of the closely watched Senate races. The party needed to gain at least six Democratic seats in order to win the majority. Republicans picked up at least seven Democratic seats in Montana, South Dakota, North Carolina, West Virginia, Iowa, Colorado, and Arkansas. Aside from North Carolina, most of these races were won quite handily. And Republicans successfully fended off all Democratic attempts to gain seats. Senate Minority Leader (soon to be Majority Leader) Mitch McConnell turned back a challenge in Kentucky and Republican David Perdue won the majority of the vote in Georgia to avoid a runoff that would have been required by that state’s rules if not candidate had won a majority of the votes. His win keeps retiring Senator Saxby Chambliss’ seat in Republican hands. And, Republican Kansas Senator Pat Roberts defeated a challenge from independent candidate Greg Orman who had Democratic backing.
There are three Senate results that remain unclear at this time. Louisiana rules (like Georgia’s) require a candidate to win an outright majority of the vote or go to a run-off between the top two finishers to decide the election. No one was able to win a majority Tuesday in the race between incumbent Democrat Mary Landrieu and challenger (and current Congressman) Bill Cassidy. They will face-off in a December run-off vote. And, as of this writing, the race in Alaska between incumbent Democrat Mark Begich and Republican Dan Sullivan had not yet been called though the vote counts favor Sullivan and it appears likely that Alaska will be the eighth Democratic Senate seat won by a Republican. Finally, in a surprise in Virginia, Republican challenger Ed Gillespie has given incumbent Democrat Mark Warner a very close race. Warner was expected to win relatively easily, but in a sign of just how good this year has been for Republicans, the race has not yet been officially called, though Warner has a small lead based on the vote counts reported thus far. That race could end up in a recount.
Overall then, Republicans will hold at least 52 seats in the Senate when the 114th Congress convenes in January and they could have as many as 55 seats if the Alaska results hold, the Virginia results change, and the Louisiana run-off goes their way.
These results are also as of 7 a.m. on November 5. A party needs 218 votes to have a majority in the House.
113th Congress (*218 seats need for the majority)
House Republicans further cemented their hold on the majority of the House of Representatives, winning the largest majority they’ve had since their historic wins in the 1946 election. Prior to the election, Republicans held 233 House seats and the Democrats held 199 seats. Republicans have increased that majority to at least 242. Democrats will have at least 174 seats in the next Congress. And, at this time, 19 races still remain undecided – of those, Democrats lead in 11, Republicans lead in six, and in Louisiana, two others will be decided by run-offs in December. Republican leadership in the House will largely remain the same, but there will be changes in some committee leadership posts. Some of those seats will change due to the current chairmen reaching the end of their tenures and others due to retirements. There were some particularly noteworthy House results. Incumbent Republican and Chairman of the Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade, Lee Terry (R-NE) trails in the current vote count though the race has not yet been called. After a last minute assault, Energy and Commerce Committee Chairman Fred Upton (R-MI) retained his seat with a large majority of the vote. Incumbent John Barrow (D-GA) lost his swing district to Republican Rick Allen. In California, incumbent Democrats Mike Honda and Jim Costa were both in danger of losing. Though neither race had yet been called, Honda had a narrow lead in the latest vote count and Costa trailed, though it should be noted that Honda’s challenge came from a fellow Democrat. Also noteworthy: Republican Steve Southerland (R-FL) lost his bid for reelection to Gwen Graham (daughter of former Sen. Bob Graham); Michael Grimm (R-NY) was reelected despite being under a 20-count federal indictment; and Vance McCallister (R-LA) – the “kissing congressman” who was caught on camera engaging in inappropriate behavior with a female staffer was defeated.
There were 36 Governors’ seats up for election on Tuesday. As of 7 a.m. on November 5th, Republicans had won 24 of those contests, Democrats had won eight and there were four races still undecided. In all, then, Republicans will control 31 Governors’ seats and Democrats 15 with the last four in question. This means that Republicans gained at least four governorships on Election Day and prevailed in several other close races, some in traditionally blue states and others in states expected to be presidential battlegrounds in 2016. Self-funded Republican venture capitalist Bruce Rauner defeated Democratic Gov. Pat Quinn in Illinois, delivering a blow to President Obama who had campaigned for Quinn. Former Republican Congressman Asa Hutchison won the Arkansas Governor’s mansion, defeating former Democratic Congressman Mike Ross. Republicans also won victories in traditionally Democratic-leaning Maryland, Massachusetts, Maine, and Rhode Island. And, in a closely watched race in Florida, Republican Rick Scott managed a narrow victory over Democrat Charlie Crist. The only Democratic gain as of this writing was in Pennsylvania, where first-time candidate Tom Wolf defeated Republican Gov. Tom Corbett.
Importantly, Republican Governors Scott Walker and John Kasich won re-election in Wisconsin and Ohio, respectively. Both men – particularly Gov. Walker – are considered potential presidential nominees in 2016.
Congressional Leadership Expectations
Senate Republicans: With Republicans now in control of the Senate, Mitch McConnell (R-KY) will become that chamber’s majority leader. In addition, Sen. John Cornyn (R-TX) is expected to remain the Republican whip, Sen. John Barrasso (R-WY) is expected to remain Policy Committee chair, and Sen. John Thune (R-SD) is expected to remain Conference chair. It is not clear who will succeed Sen. Jerry Moran (R-KS) as chair of the National Republican Senatorial Committee (NRSC). Senators Roger Wicker (R-MS) and Dean Heller (R-NV) are reportedly considering running for the position though they have not made those decisions public. This will be a daunting assignment in 2016 because Republicans will be at risk of losing seats – Democrats will have to defend just 10 Senate seats in 2016 compared with 24 for Republicans. And, several of those Republican defenses will have to take place in traditionally blue states such as Illinois and Wisconsin as well as swing states such as New Hampshire, Ohio, and Florida.
Senate Democrats: Despite losing majority status in the Senate, Democrats are not expected to make any dramatic changes to their leadership in the chamber. Senator Harry Reid (D-NV) has indicated that he will seek to retain his leadership post, now as minority leader. Senior Democratic sources have stated that he has the support of the caucus leadership. Senator Charles Schumer (D-NY), widely considered Reid’s most likely successor, is not expected to challenge Reid and will continue to play a significant role in forming the Democratic message as chairman as of the Democratic Policy and Communications Committee and vice chairman of the Senate Democratic Caucus. Senator Richard Durbin (D-IL) will likely remain the Democratic whip. A number of senators have expressed interest in chairing the Democratic Senatorial Campaign Committee (DSCC) in the next cycle. This is not surprising considering the favorable Senate election map for Democrats in 2016. At this stage, most expect the next DSCC chair to be Sen. Kirsten Gillibrand (D-NY), Sen. Amy Klobuchar (D-MN), or Sen. Jon Tester (D-MT). Sens. Chris Coons (D-DE), Claire McCaskill (D-MO), Sheldon Whitehouse (D-RI), and Sherrod Brown (D-OH) are also possibilities.
House Republicans: With the Republicans expanding their majority in the House, John Boehner (R-OH) will remain Speaker though it is possible that there will be a symbolic but unsuccessful challenge from the right. Kevin McCarthy (R-CA) will remain the House majority leader, and Steve Scalise (R-LA) will continue as whip. Greg Walden’s (R-OR) tenure as chairman of the National Republican Congressional Committee (NRCC) may be in jeopardy, however. Although Republicans successfully extended their majority in Tuesday’s elections, some Republicans are upset that House Republicans have been consistently outraised by their Democratic counterparts. Some Republicans, including Reps. Roger Williams (R-TX) and Aaron Schock (R-IL) are reportedly positioning themselves to replace Walden. Cathy McMorris Rodgers (R-WA) will continue as Republican Conference chair, Lynn Jenkins (R-KS) as Conference vice chair, and Virginia Foxx (R-NC) as Conference secretary. There will be an open race to replace James Lankford (R-OK), who just won election to the Senate, as Policy chair.
House Democrats: House Democratic Leadership is expected to remain unchanged in the upcoming Congress. As in the last few elections, there have been rumors that Minority Leader Nancy Pelosi (D-CA) may decide to step down; however, there has been no indication of that yet and, unless she does, she will remain minority leader. Similarly, it is likely that the current Democratic Whip Steny Hoyer (D-MD) and Assistant Democratic Leader James Clyburn (D-SC) will continue in their positions. Likewise, in the Democratic Caucus, Xavier Becerra (D-CA), and Joe Crowley (D-NY) will remain chairman and vice chairman, respectively.
Agriculture Committee: Since passing the Farm Bill in February 2014, the committee has been focused on the bill’s ongoing implementation and that will continue.
Current Chairman Frank Lucas (R-OK) is term-limited; Rep. Michael Conaway (R-TX) is expected to take over as chairman next year. Colin Peterson (D-MN) is expected to remain ranking member.
Appropriations Committee: In 2014, the House Appropriations Committee passed seven appropriations bills, none of which went to conference with the Senate. Before leaving for recess in September 2014, Congress passed a continuing resolution that leaves the government funded at current levels until December 11, 2014. The committee will continue to work toward completing fiscal year (FY) 2015 appropriations, either in the lame-duck session or in the new Congress. And, with the Republican majority in the Senate, House appropriators may be able to get back to passing all of their bills for FY2016 and working with their Senate colleagues to finish the annual funding process. That said, the Republican Party has internal differences on budget matters that could complicate the process.
Rep. Hal Rogers (R-KY) is expected to continue chairing the committee and Rep. Nita Lowey (D-NY) is expected to remain ranking member. In addition, more than half of the Appropriations subcommittees could see new chairmen in the 114th Congress due to the retirement of several senior appropriators.
Budget Committee: The Murray-Ryan budget deal announced in December 2013 outlined FY2014 and FY2015 funding levels. Since then, responsibility for the FY2015 budget process has moved on to the appropriations committees in the House and Senate, so the House Budget Committee’s next major item will be the FY2016 budget.
Current Chair Paul Ryan (R-WI) is expected to become chairman of the Ways and Means Committee; Rep. Tom Price (R-GA) is expected to succeed Ryan as Budget Committee Chairman. Democratic Rep. Chris Van Hollen (D-MD) is expected to remain the Committee’s ranking member.
Education and the Workforce Committee: The committee is expected to hold hearings on the National Labor Relations Board (NLRB) and Equal Employment Opportunity Commission (EEOC) regarding those agencies’ regulations and guidelines governing the nature of wages and hours as well as the NLRB’s controversial decision on the joint employer responsibilities of franchisors. The committee is exploring options for increased independent oversight of both agencies. The committee will also study potential legislative solutions to address concerns about data mining and student privacy.
Rep. John Kline (R-MN) is expected to remain chair of the committee, and Rep. Bobby Scott (D-VA) is next in line to succeed retiring ranking member George Miller (D-VA).
Energy and Commerce Committee: In 2015, the committee is expected to focus legislative efforts on energy, an update of the Telecommunications Act, the Federal Communications Commission’s (FCC’s) net neutrality rulemaking process, and health care regulations. The committee will also explore issues including privacy, data security and ways to deal with restrictions foreign nations are placing on the flow of data across borders. Additionally, the committee will have oversight hearings on auto safety and the work of the National Highway Traffic Safety Administration (NHTSA). These hearings could lead to legislative action on auto safety and recall procedures.
Rep. Fred Upton (R-MI) is expected to remain chairman of the committee. Current Ranking Member Henry Waxman (D-CA) is retiring, and Reps. Anna Eshoo (D-CA) and Frank Pallone (D-NJ) are competing to succeed him though Eshoo is the favorite of Minority Leader Nancy Pelosi (D-CA) and likely to become ranking member.
Financial Services Committee: Current Committee Chairman Jeb Hensarling (R-TX) has focused his work on legislation relating to Fannie Mae and Freddie Mac. That work will continue in the next Congress. The committee will conduct oversight of the Consumer Financial Protection Bureau (CFPB) and look at ways to reduce regulations on financial institutions.
Rep. Hensarling is expected to remain chair though he may face a longshot challenge from Rep. Frank Lucas (R-OK). It is likely that Rep. Lucas will abandon his bid before making a steering committee vote necessary. Such a move could land Rep. Lucas a subcommittee chairmanship or a role as vice chairman of the committee. Rep. Maxine Waters (D-CA) is expected to remain ranking member.
Judiciary Committee: The committee’s jurisdiction over intellectual property issues will figure prominently in its 2015 agenda as it is expected to consider patent reform issues and continue exploring copyright and trade secret law in the United States. The panel also has jurisdiction over most immigration issues, though the prospects for immigration legislation in the next Congress appear slim.
Rep. Bob Goodlatte (R-VA) is expected to remain chairman of the committee, and Rep. John Conyers (D-MI) is expected to remain ranking member.
Transportation and Infrastructure Committee: The committee will develop legislation to continue federal highway programs. The current authorization and funding for these programs expires in May 2015.
Rep. Bill Shuster (R-PA) is expected to remain chair. Ranking Member Nick Rahall (D-WV) lost his bid for reelection. Rep. Peter DeFazio (D-OR) is next in line in Democratic seniority on the committee, though it is not determined as of this writing who will assume the ranking member post.
Ways and Means Committee: In the short-term, the committee is expected to pass expiring tax provisions (through legislation known as “tax extenders”) during the lame-duck Congress in 2014; moving forward, the committee will try to develop comprehensive tax reform legislation. Widespread concern over corporate inversions may provide momentum for such an overhaul, though the prospects for a broad rewrite of the tax code are slim. The committee will also need to develop a mechanism for funding the Highway Trust Fund beyond May 2015 when current funding expires.
Current Budget Committee Chairman Paul Ryan (R-WI) is expected to give up his Budget Committee post in order to succeed retiring Chairman Dave Camp (R-MI) as chairman of Ways and Means, and Rep. Sander Levin (D-MI) is expected to remain the committee’s ranking member.
Agriculture Committee: Since passing the Farm Bill in February, the committee has been focused on its ongoing implementation. Several proposed amendments to the bill have been referred to the committee though none have been reported out of committee.
Senator Pat Roberts (R-KS), who survived a close re-election race, is expected to chair the committee, and current Chair Debbie Stabenow (D-MI) is expected to become ranking member. In the event that Sen. Stabenow decides to become ranking member of the Budget Committee, Sen. Amy Klobuchar (D-MN) is expected to become the Agriculture committee’s ranking member.
Appropriations Committee: The Senate failed to pass any appropriations bills in 2014. The committee will continue to work towards completing FY2015 appropriations, either in the lame-duck session or in the new Congress, and then move on to FY2016 appropriations bills.
Sen. Thad Cochran (R-MS) is expected to become the chairman of the committee, while current Chair Barbara Mikulski (D-MD) will become ranking member. Retirements and defeats at the ballot box will lead to several changes in top Democratic positions on subcommittees, while Republican subcommittee leadership is not likely to see much change.
Banking Committee: The committee is expected to conduct oversight of the Federal Reserve and the Consumer Financial Protection Bureau. Government Sponsored Enterprise (GSE) reform will also be on the agenda. Republicans will push to explore measures to reform the Dodd-Frank Act, though Democrats will likely oppose any significant amendments to that law.
Sen. Richard Shelby (R-AL) is likely to become the committee’s chairman, and is reportedly eager to pursue changes to Dodd-Frank. Democratic leadership on this committee is uncertain – Sen. Jack Reed (D-RI) is next in line in committee seniority, but he may choose the ranking member slot on the Armed Services Committee. Sen. Chuck Schumer is next in line after Reed, and will need to decide whether he will want to be the top Democrat on the Banking Committee or continue focusing on his duties in Democratic Senate leadership. If Reed and Schumer take a pass, it is likely that Sen. Robert Menendez (D-NJ) will pass in order to be ranking member of the Foreign Relations Committee. If that happens, Sen. Sherrod Brown (D-OH) would likely become the ranking member. Senator Brown will take a more confrontational approach toward the financial services sector than Senator Schumer.
Budget Committee: The Murray-Ryan budget deal announced in December 2013 outlined FY2014 and FY2015 funding levels. Since then, responsibility for the FY2015 budget process has moved on to the appropriations committees in the House and Senate, so the Senate Budget Committee’s next major item will be the FY2016 budget.
Republican Jeff Sessions (R-AL) is expected to become the committee’s chairman. Current Chair Patty Murray (D-WA) may move into the top Democratic position on the Health, Education, Labor and Pensions Committee. If so, the ranking member position may fall to Sen. Bernie Sanders (I-VT) (if he decides to leave the top Democratic position on the Veterans Affairs Committee) because more senior Democrats on the panel may decide to take leadership roles on other committees.
Commerce Committee: The Senate Commerce Committee is expected to play a major role in cybersecurity and data security issues in 2015. The committee may also conduct oversight of NHTSA and consider auto safety legislation.
Sen. John Thune (R-SD) is expected to become chairman of the committee, while Sen. Bill Nelson (D-FL) is expected to succeed retiring Chairman Jay Rockefeller (D-WV) as the top Democrat on the committee.
Energy and Natural Resources Committee: Under the leadership of Mary Landrieu (D-LA), a key ally of the oil and gas industry, the committee has urged the Department of Energy to issue approvals for liquefied natural gas projects quickly and efficiently in the hopes that the projects will add more jobs to the economy. These efforts are likely to continue regardless of whether Senator Landrieu wins her runoff election. The committee is also expected to take up legislation on crude oil exports by early next year, as this has been a top priority for committee Republicans, who will now control the committee’s agenda. Legislation regarding the Keystone pipeline will also likely come out of this Committee.
Sen. Lisa Murkowki (R-AK) is expected to chair the committee. If Senator Landrieu wins her runoff election, she will be the ranking member. If she loses, Sen. Maria Cantwell (D-WA) is likely to take that slot.
Environment and Public Works Committee: Although the Democratic majority on this committee pushed for a longer-term highway deal, the compromise with House Republicans only funds the Highway Trust Fund through May 2015, meaning this topic will be on the committee’s agenda in the near-term. Republicans on the committee, led by climate change skeptic and incoming Chairman Jim Inhofe (R-OK), will likely devote much energy to overturning EPA regulations that they oppose, such as regulating carbon emissions from existing power plants.
Sen. David Vitter (R-LA) is currently the top Republican on the committee, but because of Republican Caucus rules and the fact that he is in the process of running for governor of Louisiana he is expected to step aside for Sen. Inhofe to become chairman. Sen. Barbara Boxer (D-CA) will be the committee’s ranking member.
Finance Committee: The committee will address expiring tax provisions (through legislation known as “tax extenders”) in the lame-duck or early in the next Congressional session. Comprehensive tax reform is also likely to be on the agenda in the next Congress. Widespread concern over corporate inversions may provide momentum for such an overhaul, though the prospects for a broad rewrite of the tax code are slim. In addition, the committee will need to develop a mechanism for funding the Highway Trust Fund beyond May 2015 when current funding expires.
Sen. Orrin Hatch (R-UT) is expected to chair the committee and Sen. Ron Wyden (D-OR) is expected be ranking member.
HELP Committee: The committee is expected to consider a variety of issues in the next Congress, including Food and Drug Administration (FDA) innovation (removing outdated restrictions on specific products and medicines), changes to Obamacare, and NLRB policy and appointments. NLRB appointments may come up during the lame-duck in order to take advantage of the limited window of time during which Democrats will remain in the majority in the senate. Student loan issues may also be on the committee’s agenda.
Sen. Lamar Alexander (R-TN) is expected to chair the committee. Sen. Patty Murray (D-WA) is expected to take over for retiring Democratic Chairman Tom Harkin (D-IA), though she may decide to remain the top Democrat on the Budget Committee. After Sen. Murray, Sens. Bernie Sanders and Bob Casey (D-PA) are the next highest ranking Democrats on the committee
Homeland Security and Gov’t Affairs Committee: The committee is expected to consider legislation related to improving cybersecurity, but the House and Senate have thus far not been able to resolve differences in their respective bills.
Sen. Ron Johnson (R-WI) is expected to chair the committee (Sen. McCain outranks him but is expected to choose to chair the Armed Services Committee). Sen. Tom Carper (D-DE) is expected to be ranking member.
Judiciary Committee: The committee is expected to continue exploring patent reform and other technology and telecommunications issues. To the extent immigration reform is considered in the next Congress, the Judiciary Committee will have jurisdiction over most of those issues as well.
Sen. Chuck Grassley (R-IA) is expected to chair the committee, while current Chairman Pat Leahy (D-VT) will become ranking member.
Legislative Expectations for the Lame-Duck Session of Congress
Congress is expected to reconvene on November 12th and stay in Washington until the 20th before recessing again for Thanksgiving break. Then, the schedule is for Congress to return to session for the first two weeks of December to finish its business for the year. What transpires during that limited time will have substantial implications for what business must occur in the next Congress. While there are rumors of a robust portfolio of issues to tackle in the lame-duck period, Congress is likely to focus most of its attention on a limited number of items: funding the government (the current “Continuing Resolution” expires on December 11); the National Defense Authorization Act (NDAA); tax extenders legislation; and the Terrorism Risk Insurance Act (TRIA). There are also several other measures Congress may consider before year’s end. Presidential nominations are likely to take some time in the Senate as Democrats will want to take advantage of the limited window of time in which they will be in the majority to confirm as many of President Obama’s appointments as possible.
Continuing Resolution (CR): Given the limited ability in the past for the House and Senate to reconcile funding differences, the chambers opted to pass a CR that keeps the government funded at FY2014 levels through December 11, 2014.
It is uncertain whether Congress will simply extend that CR for a short period of time, or pass a full or partial omnibus appropriations bill funding the government through the end of September 2015. Incoming Senate Majority Leader Mitch McConnell (R-KY), House Appropriations Committee Chairman Rogers, and House Majority Leader Kevin McCarthy (R-CA) have voiced support for an omnibus package. Work has already begun between House and Senate staffers on a package. The argument in favor of an omnibus bill is that it would remove an early spending shut down confrontation with President Obama in the new year. A “partial omnibus,” combining defense-related appropriations bills with perhaps Homeland Security, Agriculture, and Commerce-Justice-Science bills is also a possibility. It should be noted, however, there will not be much time to finalize any omnibus package during the lame-duck.
Some Republicans – particularly in the House – may be reluctant to support a long-term funding bill because it would eliminate an immediate opportunity to scale back the Obama Administration’s regulatory agenda through the use of policy riders on appropriations bills. These members may prefer a short-term FY2015 CR, setting up an early “must-pass” vote on finishing the FY2015 appropriations process in early 2015. That extension could serve as a vehicle to legislate against objectionable regulations and make it difficult for President Obama to veto. Republican leaders, however, may argue that these fights are better suited to be engaged during the FY2016 appropriations process. This strategic decision will be a major issue in the lame-duck and impact how the 2015 legislative year unfolds. National Defense Authorization Act (NDAA): Congress has not failed to approve an annual defense bill for more than 50 years, so most expect it will do so again this year during the lame-duck. The House approved a bill in May, and the Senate Armed Services Committee has approved a bill as well (though it has not been approved by the full Senate). Committee staff are already pre-conferencing their respective bills in anticipation of the lame-duck.
Tax Extenders: IRS Commissioner John Koskinen recently said that a decision regarding tax extenders should be made no later than the end of November in order to prevent disruptions and delays to the tax filing season. He further noted that the uncertainty related to the provisions “raises serious operational and compliance risks.” Such warnings have become commonplace in recent years as decisions about tax extenders have been pushed until the end of legislative sessions, and beyond. Current Democratic Senate Finance Committee Chairman Ron Wyden has made his preference clear: Extend all expired tax provisions for two years, thus allowing Congress to negotiate comprehensive tax reform in the interim. Sen. Wyden’s counterpart in the House, Ways and Means Committee Chairman Dave Camp, prefers to permanently extend certain credits (such as the Research and Development tax credit) while allowing the rest to expire. Chairmen Wyden and Camp have reportedly held discussions about how to address tax extenders. A one-year extension, perhaps making one or two of the credits permanent, may be a potential compromise. Both chairmen share the goal of passing comprehensive tax reform; the lame-duck work surrounding extenders will foreshadow how broader tax reform negotiations may proceed next year.
Terrorism Risk Insurance Act (TRIA) Reauthorization: The current TRIA legislation expires at the end of the year. The Senate passed a reauthorization in July with overwhelming bipartisan support (93-4 vote). The House Financial Services Committee reported a bill in July, but this legislation did not have sufficient Republican support for House leadership to bring it to the floor under the so-called “Hastert Rule” (requiring a majority vote of members of the majority party before legislation is considered for a floor vote). The House bill differentiates between the type of attack to be covered – conventional terrorist attacks vs. nuclear, biological, chemical, or radiological attacks – and would impose a higher “trigger” for tapping the program for conventional attacks. The Senate bill makes no change to the trigger regardless of the type of attack. Both bills would raise the insurer co-shares.
Other Issues: In addition to the items noted above, there are a plethora of other issues Congress might consider during the lame-duck:
Internet Tax Issues: The House in July approved legislation to make permanent the ban on state and local taxation of internet access and on multiple or discriminatory taxes on e-commerce (the Internet Tax Freedom Act). A companion bill in the Senate has been introduced but has not been approved by the Finance Committee. Before adjourning in September, Congress extended through December 11 the current ban as part of the FY2015 CR. There may be a push during the lame-duck to combine the Internet Tax Freedom Act with the Marketplace Fairness Act (which deals with sales taxes for online purchases). Outgoing Majority Leader Reid has publicly committed to combining the two even though the top Democrat on the Finance Committee, Ron Wyden, opposes the Marketplace Fairness Act. Satellite Television Extension and Localism Act (STELA) Reauthorization: The law expires at the end of the year, so reauthorization is a top priority and may serve as a vehicle for other video-related measures. Committees of jurisdiction in the House and Senate have acted which makes a compromise during the lame-duck more likely though not certain. Trade Issues: There is a possibility that the lame-duck session of Congress could include a vote on Trade Promotion Authority (TPA). Late last month, United States Trade Representative Michael Froman reiterated the Administration’s desire for TPA, but whether a vote occurs on trade legislation in the lame-duck session will largely depend on whether it would work given the schedule and political landscape. There is also a possibility that a vote on a package of other trade measures, including reauthorization of the Generalized System of Preferences program, customs reauthorization and the long-delayed miscellaneous tariff bill, could occur during the lame-duck session. National Security: Several lawmakers on both sides of the aisle have been pushing for a vote as to whether the President is authorized to use force in the Middle East against the Islamic State — and it is expected that lawmakers will resume this debate when they return to Washington. Presently, air strikes are being carried out by a US-led coalition, but there is little evidence that the militants’ power has been diminished; and the temporary authorization for the President’s plan to arm and train moderate Syrian rebels will expire on December 11. In light of the public’s previous support for taking action against the Islamic State, it will be interesting to see whether further actions will be authorized during the lame-duck. Ebola: Given the attention in the media to the outbreak of Ebola in Africa and the handful of cases in the United States, there will be congressional oversight of the Administration’s response to the disease as well as state policies and the nation’s readiness to deal with new cases of Ebola. The Senate Appropriations Committee is expected to hold the first appropriations hearing on Ebola and the government’s response to the virus this week. Meanwhile, House Democrats are pushing the Chairman of the House Appropriations Health Subcommittee, Jack Kingston (R-GA), to hold a hearing on Ebola response funding. Since September, lawmakers have already approved over $800 million to fight the Ebola crisis. Their ability to approve more spending in the lame-duck could hinge in part on whether they can agree to a FY2015 omnibus spending bill or whether they can only pass a short-term continuing resolution. Cybersecurity / Domestic Surveillance: Both the House and Senate Intelligence Committees have passed legislation facilitating public-private information sharing to enhance cybersecurity. Although action in the lame-duck is unlikely absent a triggering event, certain key lawmakers have expressed a desire for action on these bills before the end of the year. In addition, outgoing Senate Judiciary Committee Chairman Pat Leahy has said he would like to pass a measure limiting domestic electronic surveillance and metadata collection during the lame-duck. House Judiciary Committee Chairman Bob Goodlatte is also making a pitch for moving forward on legislation he says would protect privacy and help companies “begin to rebuild trust.” Nominations: As noted above, confirming presidential appointments will likely be a top priority for outgoing Senate Majority Leader Harry Reid, because confirming presidential appointees will be more difficult with a Republican majority next year. Attorney General Eric Holder has announced his intention to resign from office once a successor is confirmed. No nominee has been put forward to replace him, but the President may do so during the lame-duck session. In addition to Mr. Holder’s replacement, key positions at the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission as well as a number of judicial vacancies will need to be addressed.
Legislative Expectations for the 114th Congress
With Republicans in charge of both chambers of Congress, the GOP will have the opportunity to set the legislative agenda for the first time in almost a decade. This comes with advantages and disadvantages. Party leaders will be able to set the agenda in the Senate, and force Democrats to take politically difficult votes and, potentially, force President Obama to decide whether to veto legislation. At the same time, Republicans will no longer be able to simply “just say no” to the President’s agenda – they will be held responsible for governing. This will create pressure to find areas of compromise with President Obama and, frequently, congressional Democrats, presenting challenges for a party that spent most of the 2014 campaign season promising to oppose the Obama Administration’s agenda.
It remains to be seen whether Republican leaders will be able to bridge the gap between their moderate and more conservative members. A sharp turn to the right may appeal to the party’s base, but it will not help convince the electorate that Republicans are ready to take over the White House in 2016. It would also pose challenges for several Republican senators up for re-election in Democratic and swing states in 2016. Failure to accomplish some of the most basic governing tasks – funding the government and avoiding a default on the nation’s obligations – will be important steps to avoid self-inflicted damage to the party’s brand.
They will have to do this with a slim majority in the Senate and a heterogeneous caucus – from conservative Ted Cruz (R-TX) to moderate Susan Collins (R-ME). House leadership, meanwhile, will have to decide how to approach dealing with the Senate – some expect the House’s role to shift a bit, waiting for the Senate to act on major bills rather than pressuring the Senate to take up House legislation.
Overall, Republican leadership in Congress will want to exert as much pressure on – and extract as many concessions from – President Obama and congressional Democrats as possible without overreaching and appearing unable to govern heading into the 2016 elections.
The last two years of a President’s second term have tended to be productive from a legislative standpoint in recent history. Bill Clinton and Ronald Reagan both had successes during this part of their tenures. Whether that will happen in the upcoming Congress depends upon whether the President and Congress can find a good way to compromise given their disparate political views.
The House and Senate will likely consider a tax extenders package during the lame-duck session of Congress, or very early in the next session. (See Lame-Duck Session of Congress above.) Once extenders are done, the discussion will move to comprehensive tax reform, though the odds of actually enacting a broad-scale rewrite of the tax code in the 114th Congress are not particularly high.
With the political alignment changed and Republicans controlling both chambers in the 114th Congress, the House and Senate may work together to generate comprehensive tax reform legislation in a manner that would have been impossible if Democrats retained control of the Senate. That effort would likely include flattening rates by moving to a three bracket system (10%, 25%, and 35%), maintaining revenue neutrality, broadening the tax base, and modifying provisions pertaining to capital gains, the personal exemption and standard deduction. Many of those proposals are likely to come from the tax reform proposal released by retiring House Ways and Means Chairman Dave Camp earlier this year, though that proposal was widely criticized by the business community so certain key changes are to be expected. Of course, despite Republican control in Congress, any major legislation will include a battle between the Executive and the Legislative branches. There is a chance that the President and Congress could find common ground on some of these issues, including corporate tax reform, but tax reform is notoriously difficult to get done.
If Congress passes a short-term CR during the lame-duck (see Lame-Duck Session of Congress above), expect it to look very similar to the measure passed in September. An omnibus spending bill is possible, however, in the lame-duck session or early next year. Indeed, the bipartisan foundation for an omnibus was established last December when lawmakers – led by Senate Budget Committee Chairman Patty Murray and House Budget Committee Chairman Paul Ryan – reached an agreement that set both domestic and national security spending levels for fiscal years 2014 and 2015. The deal gave Congress a funding roadmap for FY2015, setting spending less than one percent above current levels at $1.014 trillion.
Not only are the overall funding levels established for FY2015, but last December’s budget deal also established caps for defense and non-defense discretionary spending. Thus, the differences between House and Senate appropriations bills are less substantial than in previous years. Republicans may look to move a variety of independent bills that are not tied to the budget in order to force confrontations with the President on policy priorities without threatening a shutdown of the federal government.
If Congress passes a FY2015 CR during the lame-duck, there may be policy confrontations as part of the budget process that threaten a shutdown early in 2015. The national “debt limit” will need to be raised at some point in the middle of 2015 as well. Republicans will have to make a strategic decision regarding how they choose to package a debit limit increase. Republicans will have several choices: including it in an appropriations measure concluding FY2015 spending; including it in a reconciliation bill; or tying it to some other measure.
With Republicans now in the majority, the Senate next year could look to pass legislation using the Budget Reconciliation Process. Reconciliation is theoretically designed to be used for budget-related measures, but has been used to pass more substantive policy changes as well (such as the Affordable Care Act). This process significantly limits debate in the Senate (20 hour maximum, no filibuster) and further restricts the amendment process. Because Republicans do not have a filibuster-proof majority in the Senate, Reconciliation could be a useful tool in the next Congress.
In addition to FY2016 funding measures, other issues that could be addressed under a Reconciliation bill are: i) overall budget caps from the Budget Control Act; ii) entitlement reform (to include: Medicare, food stamps, Social Security, and Affordable Care Act reform); and iii) many of the jobs-related bills that the House has previously passed.
The Reconciliation process does not come without risks, however. First, it could disrupt efforts to move other bills through the Senate because Democrats would be less inclined to support Republican priorities. Second, the Republican majority in the Senate remains small, meaning a small number of Republican senators – perhaps those that are running for president – could impede budget proposals that require 50 votes for adoption. Indeed, several Republican presidential hopefuls, including Ted Cruz and Rand Paul (R-KY), may have very different agendas next year than their party leaders.
Although Republicans now control both chambers, the 114th Congress will likely represent somewhat of a shift in healthcare legislative policy away from efforts to repeal the Affordable Care Act (ACA) in its entirety, and toward more targeted efforts to reform it and make it more workable. Though there will be isolated calls – and perhaps votes – to “repeal and replace” ACA, it is anticipated that some Republicans who were previously reluctant to support measures reforming the legislation – holding out hope for eventual repeal – will sign onto measures designed to make the law more feasible for businesses and consumers. Similarly, many Democrats who had previously been reluctant to acknowledge significant shortcomings in the law may be more willing to support narrow, targeted reforms.
Along those lines, the following issues could be in play in the 114th Congress:
40-hour workweek: ACA currently defines a “full-time” employee as one who works an average of at least 30 hours/week. Legislation to raise this number to as much as 40 hours per week has passed the House and received support from some moderate Senate Democrats. Employer/Individual Mandate: ACA’s employer mandate is now scheduled to take effect for employers with more than 100 full-time equivalent employees on January 1, 2015. Some members of Congress may introduce legislation to delay and/or repeal the employer mandate. Prospects for this legislation will ultimately hinge on whether the Administration supports the idea. It has delayed the mandate in the past, but will energetically fight any repeal effort. Absent currently-unforeseen political developments, further delays are unlikely next year. Similarly, the individual mandate has been in effect in 2014 but “penalties” for individuals that do not obtain adequate health coverage will not be levied until 2015. Expect this process to generate calls to delay or repeal the individual mandate as well. Such measures are also unlikely to succeed. Employer Reporting Requirements: ACA contains somewhat onerous reporting obligations for large employers. Bipartisan legislation has been introduced to streamline these requirements and make them more manageable. Cadillac Tax: Under ACA, beginning in 2018 a 40 percent excise tax will be imposed on the value of health insurance benefits exceeding a certain threshold. A larger number of plans will likely be exposed to this tax than was anticipated when the ACA was drafted. Legislation limiting the plans to which this tax applies is a possibility. Auto-Enrollment: ACA requires employers with more than 200 full-time employees that offer health coverage to automatically enroll new full-time employees in a coverage option. Although the provision has not taken effect yet, many employers are concerned that this requirement will generate confusion for employees who may not desire to enroll in a particular plan. Previous bills to repeal the auto-enrollment provision have not passed, but such legislation may face an easier path to passage in the 114th Congress. Medical Device Tax: ACA calls for a 2.3% tax on the manufacture and importation of medical devices. The House has passed legislation repealing the tax, and 79 senators from both parties agreed to repeal the medical device tax in a non-binding vote last year, though Senate leadership blocked efforts to consider legislation repealing the tax. Some are targeting the tax for repeal in tax extenders legislation during the lame-duck session. If those efforts do not succeed, it will be a top Republican priority in 2015. Independent Payment Advisory Board (IPAB): ACA created IPAB to identify mechanisms for achieving savings in Medicare without affecting coverage or quality. Both physicians and hospitals generally oppose IPAB, and the House has voted to repeal it. Such measures will certainly be on the table in the 114th Congress.
Beyond these issues, a number of ACA rules and regulations are expected in the next two years, including regulations prohibiting employers from discriminating in favor of higher-paid employees in terms of health benefit offerings. In addition, on Election Day the Obama Administration announced plans to issue a rule requiring all employer health plans to cover hospitalization and physician costs in order for the employer to avoid a penalty under the law.
The lack of a national “benchmark” plan may also garner policymakers’ attention as consumers discover that significant state-by-state variation exists in ACA “essential health benefits” that insurers must cover to offer plans on exchanges. The text of ACA clearly calls for federal establishment of a basic “benchmark” health plan for use in exchanges and by small businesses. This was one of the few core cost-containment tools in ACA – eliminating costly mandatory services that most consumers do not need or want. To date, the Obama Administration has punted on this issue, instead directing every state to establish its own “benchmark” plan. Many states have established plans that go far beyond the benefits called for in ACA. This leads to higher costs for consumers and for employers. This issue presents an opportunity for lawmakers in both parties to pressure the Obama Administration to establish a national benchmark plan consistent with ACA’s original intent.
In light of the well-funded and organized criminal thefts of data from US organizations of all types, data security will continue to be an actively debated issue in the 114th Congress. From a legislative standpoint, it remains to be seen whether bills will focus on data breach notification, data security, or both. Notification may be easier to pass given Congress’ lack of consideration of data security in past bills, but some will see an exclusive focus on notification as skirting the underlying issues.
Ultimately, significant breach notification efforts may be driven by the states, where state legislatures and attorneys general have been pushing it as a serious consumer issue. Should state legislation prove to be particularly stringent, the prospects of a federal bill that preempts state laws would improve. Legislative action will take place in the House Energy and Commerce Committee and the Senate Commerce, Judiciary, and Banking committees. For the Senate, in particular, there are many competing bills and approaches to the issue which implicate both the committee(s) that take the jurisdictional lead and the senator(s) that can claim political credit for any progress that is made. Thus far, Judiciary Committee Chairman Leahy, Commerce Committee Chairman Rockefeller, and Senators Tom Carper, Roy Blunt (R-MO), Pat Toomey (R-PA), Richard Blumenthal (D-CT), and Edward Markey (D-MA) all have pushed different legislative solutions. The competition between these vehicles helped block progress in the current Congress and may do so again next year.
There is broad consensus that the nation’s critical infrastructure must be protected, but Congress has not yet found common ground on how to promote effective cybersecurity. Some lawmakers prefer public-private information-sharing and liability protections, while others tend to favor more comprehensive legislative solutions that would mandate specific cybersecurity requirements for at-risk sectors. There will be a push for information-sharing legislation during the lame-duck session (see Lame-Duck Session of Congress above), but even if it doesn’t happen during that timeframe such a measure seems to be where a consensus is easiest to achieve. With Republicans in control of both chambers in the next Congress, prospects for cybersecurity legislation increase.
There is also potential for cyber action by regulators. Several independent agencies and executive branch departments are engaged in rulemaking and other activities which will not affect companies directly but may serve as the foundation for requirements in the future. On the other hand, the Obama Administration has not pursued minimum cybersecurity standards to improve the cybersecurity of the nation’s critical infrastructure, instead pushing for private industry to establish a voluntary “best practices” framework developed through the National Institute of Standards and Technology’s multi-stakeholder initiative.
Even though privacy continues to be an issue of bipartisan concern, there has been little movement on privacy legislation over the past year and it is unclear whether that can change in the next Congress. Electronic Communications Privacy Act (ECPA) reform has stalled even though the majority of the House backs ECPA reform legislation and House Judiciary Chairman Goodlatte has called ECPA-reform a “top priority.” The Senate ECPA reform bill did not reach the floor after it was favorably reported out of the Senate Judiciary Committee. Although the White House supports ECPA reform, the SEC has been a vocal opponent of such reforms because the current legislation would limit its investigative powers.
The states may be more active legislating on privacy issues than Congress. On privacy matters, Republicans are resistant to granting more authority to the FTC. That agency has limits on its ability to monitor and protect consumer privacy under current law and has asked Congress to expand its authority. The retirement of Senate Commerce Chairman Rockefeller, a major privacy hawk, changes the dynamic for privacy legislation in the next Congress. Incoming Chairman Thune will have a decidedly different take on the subject and that could slow Senate consideration of the issue. Democratic senators including Al Franken (D-MN), Pat Leahy, and Jeff Merkley (D-OR) have been outspoken on these issues and will try to push the debate in that body. On the Republican side, Sens. Mike Lee (R-UT) and Rand Paul may emerge as the major privacy proponents. But the politics of the issue along with the complexities of the technologies in question make legislative solutions very difficult.
After an unsuccessful push for immigration reform in the 113th, there are hopes in some quarters that a serious immigration overhaul will occur in the 114th Congress. With Republicans controlling both chambers, however, the issue is not likely to be emphasized because it tends to expose deep divisions within the party. It is further unclear how any reform efforts would be received by President Obama. For his part, President Obama is expected to impose reforms via executive orders in the coming months, though how far these orders will go is uncertain – and the extent of those orders may be the key question that catalyzes legislative activity. Republicans have tended to prefer a piecemeal approach to immigration reform, and there is little reason to expect them to deviate from this approach now that they control both chambers. For example, there may be some action on H-1B visas, which permit highly skilled immigrant workers to work and live legally in the United States. This issue would help with a major need for the technology industry to get more of these workers into the country. Similarly, there may be an effort to expand the green card program for relatives of current United States citizens and permanent residents, although the GOP has been less favorable to this issue than Democrats. With the change in control in the Senate, there may be enough support to get limited bills to the President’s desk, but this will likely require crossover support from Democrats.
Democrats will have to decide whether they will support narrowly targeted immigration legislation or whether they will hold out for comprehensive reform. Factoring into their political calculus will be the 2016 presidential election. Latinos will be a critical demographic in many swing states in 2016. President Obama recently acknowledged that he was re-elected in part because the GOP had alienated Latinos. It will be in both parties’ interests to maximize their support from this increasingly important, fast-growing bloc of the electorate. Therefore, Democrats and Republicans must determine if they will be better served by finding common ground with one another or by continuing to insist on their respective priorities and using those positions to appeal to voters.
With Republicans in charge of the Financial Services Committee in the House and the Banking Committee in the Senate, legislative priorities will focus on reducing regulatory burdens, facilitating lending and encouraging the growth, and expansion of the private financial sector – and, of course, oversight of Administration and agency actions.
Housing finance reform and the possible elimination of the GSEs, Fannie Mae, and Freddie Mac, will remain a focus of legislative attention in both committees, although there is still no clear path to enactment. Both Chairman Hensarling and incoming Banking Committee Chairman Shelby want the private sector to assume the roles of the GSEs without a government guarantee. However, Rep. Hensarling has met resistance to that approach among his House Republican colleagues, and even if his plan passes the House, the Senate is unlikely to pass a bill that does not contain some form of government guarantee. Another key issue, particularly for Senate Democrats like Sen. Elizabeth Warren (D-MA), will be what a GSE bill does for affordable housing. The GSE debate began with the conservatorships of Fannie Mae and Freddie Mac in 2008, and may not end next year.
Republicans have sought to reduce regulatory burdens on community banks to expand bank lending and will push even harder for those measures in the new Congress. Democrats have been supportive of some proposals but have opposed others as contrary to consumer protection. The House Financial Services Committee passed a number of regulatory relief bills in the current Congress and will likely do so again next year. In the Banking Committee, Sen. Shelby will advocate for relief measures but the outcome will not be the same as in the House. The problem is that many proposals to reduce regulatory burdens would roll back parts of the Dodd-Frank Act, which Democrats do not want to amend. Changes to Dodd-Frank are expected to occur, but they will likely be for narrowly defined purposes rather than broad revisions which Democrats view as undermining that Act.
A perennial target for Republicans, the CFPB, will be the subject of attention in both committees. Reorganizing the top management of CFPB into a five-person board or commission structure in place of the current one-person director framework will be one objective. This may have a chance in Congress given that initial Democratic CFPB proposals included a board structure for the agency, but the Administration may strongly oppose these efforts. Another proposal may make CFPB’s budget subject to the Congressional appropriations process. Whatever happens, CFPB issues will continue to underscore the different regulatory and consumer protection philosophies of Democrats and Republicans.
There will also be hearings and possible legislative action next year on the transparency of Financial Stability Oversight Council policies and proceedings, as well as oversight of bank agency actions to accommodate a Justice Department investigative initiative – Operation Choke Point – which, intentionally or not, morphed into limits on bank lending to disfavored companies. In addition, the notion of “Too Big to Fail,” i.e., regulatory treatment and government protection of large financial institutions, will also remain a focus of attention in both chambers.
With the 2016 elections looming, there will be pressure on both Rep. Hensarling and Sen. Shelby to show that a Republican-controlled Congress can pass financial services legislation. The test will be whether they can work within their own caucuses and reach across the aisle to find measures that can be enacted.
In many ways, the energy agenda in the 114th Congress will be dominated by the Obama Administration’s energy policies: Republicans will fight to peel back EPA regulations and pursue other energy-access initiatives the Administration is unlikely to support, while Democrats will largely defend the Administration’s priorities. How this will play out depends in large part on the upcoming lame-duck session of Congress.
If Congress passes a short-term continuing resolution to fund the government for three to six months, Republicans will likely try to attach energy policy riders to an FY2015 omnibus appropriations bill, setting up an early confrontation over energy policy.
A similar strategy may be employed on FY2016 appropriations bills in order to push the Republicans’ energy policy agenda. The President may be more willing to veto such measures if they come up early enough in the year that they do not carry with them the immediate threat of a government shutdown.
The following EPA regulations will be targets for appropriations riders:
EPA new source performance standards for new and existing power plants.
These regulations – especially those covering existing plants – are by far the biggest target for Republican leaders, including incoming Majority Leader Mitch McConnell, who won reelection in large measure by promising to oppose the Obama Administration’s “war on coal.” More modest changes to these regulations are also possible (such as delaying an interim compliance deadline that under an EPA proposal would require states to begin reducing emissions in 2020), and could make a real difference in reducing compliance costs without eliminating the broader regulation.
EPA and the Army Corps of Engineers’ revised definition of “Waters of the United States” stipulating which waterways fall under the federal government’s jurisdiction.
This rule has garnered a lot of bipartisan opposition, in large part due to rural concerns in red and blue states. It may be a topic on which President Obama is more willing to compromise.
Expediting approval of the Keystone XL Pipeline.
Keystone supporters have come tantalizingly close to overcoming filibusters in the Senate. On Election Day they picked up additional pipeline supporters that are likely to bring the pro-Keystone vote in the Senate to above the 60 votes needed to overcome a filibuster and may be close to a veto-proof margin. Senator Reid may hold a vote on the pipeline during the lame-duck session in order to provide Mary Landrieu a win to help in her run-off election. In addition, it is possible that the Obama Administration will approve the pipeline before the new Congress forces his hand.
EPA’s forthcoming revised National Ambient Air Quality Standard (NAAQS) for Ozone.
Beyond the potential for policy riders on appropriations bills, we expect some these issues to generate stand-alone legislation next year. Depending on how they are crafted and what the political environment looks like, there could be opportunities for bipartisan compromise. Lowering restrictions on oil exports and LNG exports has garnered bipartisan support in the past. Another area of potential bipartisan agreement is in changes to the treatment of depreciation and amortization expenses for tax purposes. Prior proposals have replaced modified accelerated cost recovery system (MACRS) rules with approaches closer to how depreciation is reported in financial statements. Powerful energy interest groups guard their preferential tax treatment very carefully, however, so whether previous proposals become law in the 114th Congress is uncertain.
Republican priorities less likely to garner Democratic support are bills that would streamline energy project permitting and legislation providing more access to onshore and offshore drilling. Legislation reforming the Renewable Fuel Standard (RFS) may also be considered, though prospects for an outright repeal of the RFS are not good. Legislation addressing hydraulic fracturing may also be a Republican priority.
Energy will also play a prominent role in tax reform discussions, because the tax code significantly affects the economics of the energy sector. In this context, there have been proposals to eliminate a large set of energy tax credits that include energy efficiency equipment, alternative vehicles, enhanced oil recovery, carbon capture, and advanced energy manufacturing, among other provisions. This may portend a growing consensus against tax credits for narrowly-defined energy technologies, and a preference for tax code simplification and broadening the tax base.
With the GOP in charge in the Senate, environmental rules and other regulatory actions will be under intense scrutiny in Republican-chaired Senate committees. Climate skeptic Sen. James Inhofe is expected to take over the Environment and Public Works Committee and will undoubtedly use that platform to attack power plant regulations, among other things. Sen. Lisa Murkowski will take over the Energy and Natural Resources Committee, where she is expected to hold hearings on electricity grid reliability and other impacts of the power plant regulations. In 2007, Murkowski co-sponsored legislation to set mandatory caps on greenhouse gas emissions, but in more recent years she has become a staunch opponent of EPA climate regulations.
Telecommunications issues continue to be top priorities on Capitol Hill. The last major reform of the Telecommunications Act occurred in 1996. Led in large part by House Energy and Commerce Communications and Technology Subcommittee Chairman Greg Walden, recent reform efforts are focused on modernizing the 1996 Telecom Act to address the 21st century communications landscape. Nevertheless, it is highly unlikely that the 114th Congress will pass a comprehensive telecom reform bill; rather, issues will likely be addressed on a piecemeal basis, including video reform, landline and wireless issues, net neutrality, set-top boxes, universal service reform, and perhaps FCC process reform. The House will likely move these reform bills before their Senate counterparts.
While the House will lead the way, the Senate may begin to play more of a role in telecom reform. Reform-minded Sen. John Thune (R-SD) will chair the Senate Commerce Committee and is likely to take the lead in pushing the issue in that chamber.
The FCC will continue to be active on a wide-array of telecom issues. The FCC’s Open Internet rulemaking, for example, is expected by some to be released in December 2014, but given the volume of comments and controversy on these issues we would not be surprised to see that timetable delayed. The FCC will also consider the Comcast-Time Warner Cable and AT&T-DIRECTV mergers and may make decisions on those deals in the second quarter of 2015. The merger-specific issues and conditions attached to those mergers could have wide-ranging effects across the industry. In addition, the FCC is continuing its efforts to transition traditional telephony services to IP-based systems, and it is expected to begin moving past the experimental stage and begin developing industry-wide rules in late 2014 or early 2015; and the Commission will continue to debate and prepare for the spectrum auction, which is moving much slower than anticipated, and is now slated for the beginning of 2016.
The current authorization and funding for the nation’s highway system, the 2012 Moving Ahead for Progress Act, expires in May 2015 so both chambers of Congress are expected to turn their focus to transportation issues early next year. In the past, transportation advocates have lamented the lack of long-term extensions of such programs and would like to see Congress consider a multi-year bill.
With Republicans at the helm in the Senate, the two chambers may be able to work more efficiently on such legislation. They will, however, need to find a way to deal with conservative budget hawks who raise concerns about the amount of federal spending on transportation. Dealing with those members while working enough with the President to avoid a veto may prove challenging. At the heart of these discussions will be how to fund the highway system in the future. As vehicles become more fuel efficient and rely on various sources of energy for power, the traditional motor fuel excise tax no longer adequately funds the Highway Trust Fund. Legislators on the transportation and tax-writing committees will all need to wrestle with mechanisms to fund highways into the future.
The trade agenda for the remaining two years of the Obama Administration is very ambitious as the nation aims to conclude three groundbreaking trade negotiations – focused on the Pacific, Europe, and on services. Trade has the potential to be an important area of bipartisan work. Republican control of both chambers of Congress is likely to hasten consideration and passage of Trade Promotion Authority (TPA or “fast track”), which provides President Obama the ability to submit trade agreements to Congress for an up-or-down vote with no amendments. In turn, passage of TPA could facilitate completion of the Trans-Pacific Partnership (TPP) negotiations. Launched in early 2008, the TPP negotiations, which involve 11 other countries, have been a central feature of the Obama Administration’s trade agenda. While several outstanding issues in the negotiations remain to be resolved, it is expected that TPP will be concluded next year. If TPA is enacted before TPP is submitted to Congress, TPP will be subject to an up-or-down vote for approval by Congress under the fast track procedures. The Transatlantic Trade and Investment Partnership (TTIP) negotiations with the European Union, another pillar of the Obama Administration’s trade agenda, have been underway for a year and a half, with the eighth round of negotiations to be held in Brussels this December. While the talks have lost momentum due to differences on financial services, investor state dispute settlement, and the complex nature of the regulatory issues involved, it is hoped that the talks will be reenergized now that the new European Commission is in place. US negotiators have the ambitious goal of wrapping up the Trade in Services Agreement (TiSA) negotiations (involving 51 WTO members) late next year. More time is likely to be necessary due to differences over issues such as government procurement and digital trade as well as the number of countries involved. Whether in a lame-duck session or early next year in the new session of Congress, additional trade legislation including reauthorization of the Generalized System of Preferences program and passage of the long delayed miscellaneous tariff bill is likely to see congressional consideration. The United States will also continue to negotiate investment treaties with multiple countries, including China and India. We expect continuing bipartisan support for strong trade enforcement, including vigorous pursuit of WTO dispute resolution, particularly to address perceived injurious Chinese imports in the United States or to address barriers to trade and investment in China.
Although patent reform died in the Senate in May and will not come to fruition during the lame-duck session, prospects for reform are more promising in the 114th Congress particularly now that the GOP is in the majority. The Senate is also expected to confirm the nomination of former Google executive Michelle Lee to head the United States Patent and Trademark Office (PTO), which has been without a permanent director for over a year and a half.
Both chambers are expected to try to pass patent reform legislation early in the first quarter of 2015. In the House, patent reform is expected to be a top priority for Speaker Boehner and the Judiciary Committee led by Chairman Bob Goodlatte. Last year, the House passed its patent reform bill by a vote of 325-91. The overwhelming vote makes that bill the starting point for consideration in the new Congress. Patent reform will also likely be pushed in the House Energy and Commerce Committee; however that committee will likely focus its efforts on legislation targeting bad faith demand letters.
Despite taking over as chairman of the Judiciary Committee, Sen. Chuck Grassley will likely defer to Sen. John Cornyn on this issue as he has in the past. Sen. Orrin Hatch has also been a vocal proponent of patent reform. The stumbling block in 2014 came principally from Democrats. While there are Democratic champions of reform, Majority Leader Reid was responsive to the opposition to the bill from trial lawyers. This impediment will remain significant in the next Congress, but will not carry the weight it did when Reid was majority leader.
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