Sunday night’s presidential debate was the second of three opportunities for Donald Trump and Hillary Clinton to make their case directly to the American electorate. The town hall debate, which saw a spirited back and forth on personal and character issues, also touched on a range of policy issues, including tax policy, financial services, energy, and international trade. The candidates shared their visions for the country for the next four years.

Today marks four weeks until the general election. In addition to control of the White House, the election will determine control of the House and Senate. Regardless of the outcome, there will be a new administration next January.

The following alert, which is the second in a series, highlights a few of the key public policy areas that a new administration and Congress will face. Please join us for a webinar on November 10 as we break down the election and offer our analysis on what it means for you and your industry.

International Compliance & Sanctions

As President Obama’s former Secretary of State, Hillary Clinton initiated backchannel talks with Iran that eventually led to the Iranian nuclear deal. (For more information, please see Steptoe’s advisory.) She has been a defender of the accord, known as the Joint Comprehensive Plan of Action (JCPOA), which offered Iran significant sanctions relief in exchange for its commitment to dismantle its nuclear program. If Hillary Clinton becomes president, she likely would continue supporting the agreement and team up with congressional Democrats to block any new Iran sanctions legislation that would undermine the deal. This will be well received by US and foreign businesses seeking to conduct JCPOA-consistent business with Iran.

Republican presidential candidate Donald Trump and many congressional Republicans, however, strongly opposed the JCPOA, which they viewed as a giveaway to a rogue regime that flouts its international obligations, funds international terrorism, and supports the destruction of Israel. Donald Trump called the JCPOA one of the worst deals he has ever seen, and encouraged the US to walk away from the negotiating table. Although US allies strongly support abiding by the deal, it is possible that a Donald Trump Administration could seek to renegotiate or otherwise take executive action to unravel the deal or try to extract more commitments from Iran.

Congressional Republicans likely would strongly support such action and have introduced numerous bills to reinstate Iran sanctions – including Senate Foreign Relations Committee Chairman Bob Corker’s (R-TN) Countering Iranian Threats Act of 2016 (S. 3267), which has received nominal bipartisan support from vulnerable incumbent Democrats. However, President Obama has threatened to veto the most onerous bills, and Senate Democrats have used the threat of a filibuster to keep the bills from getting the 60-vote majority needed to advance in the upper chamber. Senate Republicans likely will not gain a 60-vote majority after the election, but they face a much friendlier electoral map for the 2018 midterm elections because Democrats must defend 23 seats (plus two Independents who caucus with Democrats), but Republicans must only defend eight seats – including Chairman Corker, who is expected to remain the committee’s Republican leader and agenda-setter.

Both parties are expected to continue putting economic pressure on other problematic countries like North Korea, Venezuela, Syria, and Russia by enforcing existing sanctions or passing new ones, imposing penalties for money laundering and terrorism finance, and rooting out global corruption. While sanctions laws are not always highly partisan, in general, Democrats – especially in conjunction with a Hillary Clinton Administration that strategically deploys “smart power” – will be more likely to enforce sanctions with the goal of changing a foreign state’s behavior in exchange for lifting sanctions, as seen with the JCPOA and the rollback of Cuba and Burma sanctions. Republicans, on the other hand, have in recent years been more likely to support stronger sanctions as a punitive response to continued bad behavior, which can cause uncertainty for US and multinational companies if they fear their business activities in foreign countries will become prohibited. A Trump Administration could cause even more uncertainty in US foreign relations by altering US relationships with our allies and foreign trading partners. For example, the Committee on Foreign Investment in the United States is a US government committee that conducts national security reviews of inbound foreign investments; if Donald Trump becomes president, it is unclear whether his criticism of the US-China trade relationships would extend to influencing the committee’s review of Chinese foreign investments in the United States.

Steptoe continues to assess these and other issues as it closely monitors the 2016 presidential and congressional races. For more information on how decisions by the US government and Congress impact regulation of global commerce, please visit Steptoe’s International Compliance Blog and sign up to receive our International Law advisories.

Insurance Regulation

The largest insurance companies, along with Financial Stability Oversight Council (FSOC) skeptics, are closely watching the litigation surrounding MetLife’s designation as a “systemically important financial institution” (SIFI) under the Dodd-Frank Act. SIFIs, upon FSOC designation, are subject to enhanced prudential oversight and capital standards. After a federal district court ruled in MetLife’s favor and rescinded its SIFI designation earlier this year, the Department of Justice appealed to the DC Circuit Court of Appeals. A three-judge panel has been named to hear oral arguments in the appeal on October 24. Two of the judges on the panel are President Obama appointees, which has led some to speculate that MetLife will have a difficult time sustaining the lower court’s favorable decision.

Timing of a decision from the appellate panel is uncertain, but it is likely that the loser will seek review by the full court of appeals and/or appeal to the US Supreme Court, meaning a final outcome is not expected until well into the next Congress and administration. If MetLife ultimately is successful, it is likely that the current insurance SIFIs – Prudential and AIG – will have strong incentive and support to demand a “redo” on their designation determinations or establishment of an “off-ramp” for current SIFIs. A MetLife victory also would lend credence and momentum to legislative proposals to reform FSOC’s processes or potentially, to do away with FSOC entirely.

Other insurance-specific developments at the federal level also may be susceptible to change and/or interruption following the election, particularly if certain insurance-related authorities are curtailed. For instance, there are two early-stage rulemakings at the Federal Reserve that would set minimum capital requirements for supervised insurance institutions and enhanced prudential standards for insurance SIFIs (e.g., liquidity requirements, stress testing, etc.). Further, the Federal Insurance Office (FIO) director has been actively engaged in international insurance negotiations and efforts to implement a national insurance producer licensing system (NARAB). A shake-up in leadership or regulatory priorities at either agency could shift the direction of any ongoing activities.

FIO, a creation of the Dodd-Frank Act, has been a long-standing target of criticism for many Republicans in Congress and state insurance regulators who generally disfavor any (perceived or real) incursion into the state-based regulatory system for insurance. Some previous legislative proposals would eliminate FIO or significantly gut the office’s authority; others, such as House Financial Services Committee Chairman Jeb Hensarling’s (R-TX) Financial CHOICE Act of 2016, would only slightly recast FIO and its role. Post-election, we can expect continuing debate—reflected in legislative proposals and any new administration’s regulatory priorities—about the proper role, if any, of the federal government in the insurance space.

Labor Regulation

Driven by an increasingly “on-demand” labor force and the ever-changing nature of employer-employee relationships, labor laws have become the focus of many policymakers at all levels of government. Evolving labor laws and regulations face the prospect of significant change after the presidential election.

The Obama Administration has promoted several significant labor developments, including, but not limited to, changes to employer health care coverage requirements under the Affordable Care Act, limitations on independent contractor relationships, and an expansion of the definition of joint employer.

While most action on minimum wage increases has shifted from Washington to statehouses and local governments, the Obama Administration has taken a number of steps to raise wages for low- and middle-income Americans. In May 2016, the Department of Labor finalized regulations to increase the minimum salary threshold required to qualify for the “white collar exemption” under the federal Fair Labor Standards Act to $47,476 per year (approximately double the current benchmark). The rule, which is scheduled to take effect on December 1, is expected to dramatically reduce the number of employees that will be exempt from overtime pay requirements.

While popular with workers organizations, the new standard has proven less popular with Republicans and business organizations, which claim the new rule will impose significant costs on employers and push them to return to hourly schedules and reduce workers’ hours. In addition to multiple lawsuits filed by state and industry groups challenging the final rule, the House of Representatives approved the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act to delay the December 1 effective date for six months, until June 1, 2017. Despite the limited support for the legislation from Democrats and a veto threat from the Obama Administration, there is still a possibility that it may advance in the “lame duck” session of Congress because of the rule’s rapidly approaching effective date. Lawmakers are also advancing other legislative responses to the new overtime regulations, including legislation to phase-in the new threshold over a number of years. Republicans will be angling to include such provisions in the year-end omnibus legislation, and a phased approach may prove more palatable amongst congressional Democrats.

Hillary Clinton, as expected, has been vocal in her support for the final rule, calling the regulation a vital reform to bolster the middle class. Based on some of the rhetoric on the campaign trail, a Trump Administration might be more favorable to working class labor issues than traditional Republican politicians. He has, for example, expressed support for a “carve-out” for small businesses from the new overtime regulations. Irrespective of which candidate ends up in the White House, the House of Representatives (under Republican control) will continue to push forcefully back on all of the Obama Administration’s labor efforts.

Uncertain Fate of Tax Extenders in 2016

With Congress having passed a Continuing Resolution for funding the government and adjourned at the end of September, the next chance for legislative action will be during the lame duck Congressional session. The flurry of activity surrounding possible action on renewing the package of expiring provisions (so-called “extenders”) used to be an annual ritual. At the end of last year, however, the Protecting Americans from Tax Hikes (PATH) Act made many extenders, such as the R&D credit, permanent, and provided long-term extensions of others. For previous Steptoe coverage of the PATH Act, click here. Even with this achievement, there still remains a “small” group of extenders that expire at the end of this year. Last time, the cost of extending them for two years was just under $20 billion.

These extenders include a grab bag of small provisions, such as a credit for energy efficient new homes, special expensing rules for certain film, television, and live theatrical productions, and the exclusion for discharge of principal residence indebtedness. The fate of these provisions remains unclear. Senate leaders have expressed openness to considering a package in lame duck, while House Ways and Means Committee Chairman Kevin Brady (R-TX) has indicated his opposition to continuing the extenders process, preferring to address the temporary measures in tax reform in 2017. Recently, however, House leaders have suggested they might be willing to consider an extenders package in lame duck, along with various other pieces of tax legislation that have been reported out of the Ways and Means Committee.

Part of the extenders calculus in lame duck may be driven by a set of renewable energy extenders that have been the subject of dispute over the past year. While tax credits for solar and wind were extended for five years, other technologies such as fuel cells, geothermal property, microturbines, combined heat and power, and small wind were not included in this long-term extension. When this omission was discovered after passage, supporters maintained that under the deal reached on extenders it was intended that these tax credits would be extended as well and their omission was a mistake. There appears to be some agreement among Senate leaders that this omission was unintentional, and Chairman Hatch has indicated a willingness to act on them before they expire at the end of the year. Others, including Chairman Brady, assert that excluding them was intentional.

If there is movement on these expiring provisions, they could provide a vehicle for including various other tax legislation being considered in Congress recently, such as changes to the nuclear power production tax credit and legislation to defer stock options. These extenders and miscellaneous tax legislation could also get included in a larger spending package, such as an end-of-the-year omnibus (or a smaller “mini-bus”), as happens when Congress ends up wrapping up multiple issues into one legislative package before heading out of town.