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The 113 th Congress: The Path Forward ______________________________________________________________________________ FEBRUARY 2013 Darcy Kohn 2/15/13 11:42 AM Comment [1]: Throughout the document – some breakout House v. Senate; others don’t. Listing the new members in cumbersome might be repetitive? Somehow link to Prac Corner with Committees? However, many Committee assignments will impact what actually gets done.

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The 113th Congress:

The Path Forward

 ______________________________________________________________________________  

FEBRUARY 2013

Darcy Kohn � 2/15/13 11:42 AMComment [1]: Throughout the document – some breakout House v. Senate; others don’t. Listing the new members in cumbersome might be repetitive? Somehow link to Prac Corner with Committees? However, many Committee assignments will impact what actually gets done.

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113th CONGRESS OUTLOOK| FEBRUARY 2013

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TABLE OF CONTENTS

Introduction …………………………………… 3

The White House ……………………………… 4

New Cabinet Positions 5

Congress

Senate……………………………………….. 6

House of Representatives………………… 8

Key Policy Issues for the 113th Congress ….. 11

Budget/Fiscal Issues ……………………….. 11

Appropriations ……………………………….. 12

Agriculture …………………………………… 14

Defense ………………………………………… 15

Education ……………………………………… 16

Energy/Environment …………………………… 17

Financial Services …………………………… 20

Healthcare ……………………………………… 22

Homeland Security/Cybersecurity …………… 24

Immigration …………………………………….

International Affairs

Judiciary

Labor …………..

Tax ………

Technology ……….

Trade ………….

Transportation …………

Trade ……………

Travel/Tourism ……………….

Conclusion …………..

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After the State of the Union: A New Path

for the 113th Congress or More of the Same?

At  the  time  of  this  writing,  the  President  has  just  delivered  his  State  of  the  Union  address  and  the  113th  Congress  is  six  weeks  into  its  new  session.  Congress  is  still  organizing  and  no  major  legislative  initiatives  have  been  introduced  or  acted.  The  budget  process,  which  begins  with  the  release  of  the  President’s  budget,  is  weeks  behind  schedule.    It  seems  to  many  in  Washington  that  the  new  113th  Congress  is  just  an  extension  of  the  112th,  given  the  status  quo  election  results  and  the  fact  that  the  last  Congress  punted  a  number  of  crucial  fiscal  issues  to  the  new  one.  The  overarching  questions  that  will  play  out  over  the  coming  months  are  what,  if  anything,  has  changed  and  what  can  be  expected  now  that  the  President  has  announced  his  agenda.        The  November  elections  certainly  produced  status  quo  results  in  terms  of  White  House  and  Congressional  control.  However,  the  President’s  close  but  decisive  victory  has  emboldened  him,  as  was  seen  in  the  December  fiscal  cliff  battle  and  the  January  debt  ceiling  show-­‐down.  The  White  House  has  signaled  that  they  are  moving  to  a  much  more  aggressive  political  strategy  in  keeping  with  their  successful  re-­‐election  effort.  At  the  same  time,  Republicans  have  shown  a  new-­‐found  willingness  to  address  issues,  such  as  comprehensive  immigration  reform,  which  are  key  to  constituencies  that  deserted  them  in  November.  But  Republicans  have  also  drawn  a  harder  line  when  it  comes  to  compromise  on  budgetary  issues.  It  remains  to  be  seen  if  there  are  new  issues  and  coalitions  that  will  engender  compromise  in  the  113th  Congress,  or  if  toxic  partisanship  and  political  posturing  will  continue  to  poison  the  legislative  well.    At  this  post-­‐State  of  the  Union  interlude,  this  document  “previews”  the  113th  Congress  and  the  beginning  of  the  President’s  second  term,  with  a  focus  on  the  major  issues,  key  players  and  the  internal  party  dynamics  that  will  come  into  play  in  the  next  two  years.  Washington  is  still  a  divided  city,  reflecting  the  country’s  stark  political  contrasts.  Policy-­‐making  will  still  be  separated  into  the  mandatory,  must-­‐pass  fiscal  issues  and  the  “discretionary”  group  of  non-­‐fiscal  policy  issues  and  legislative  authorizations,  which  succeed  only  with  bi-­‐partisan  agreement.  Both  parties  took  lessons  from  the  November  elections  that  may  lead  to  compromise  in  some  areas  while  highlighting  bright  lines  that  will  never  be  erased  as  long  as  there  is  divided  government.  We  examine  all  of  this  as  the  legislative  action  now  begins  in  earnest.        

THE WHITE HOUSE

Darcy Kohn � 2/15/13 10:54 AMDeleted: Despite  the  date  on  the  calendar,  

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Darcy Kohn � 2/15/13 10:54 AMDeleted: and  where  he  wants  to  take  the  country

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The  Administration’s  sense  of  political  momentum  is  strong,  with  few  indications  of  olive  branch  offerings  to  House  and  Senate  Republicans.  Having  executed  one  of  the  most  strategically  and  effective  national  political  campaigns  in  American  history,  and  the  historic  transition  of  Obama  for  America  into  a  501(c)4  organization,  expect  the  Administration  to  bring  its  considerable  political  and  organizational  skills  to  bear  on  behalf  of  its  agenda.      Each  and  every  contentious  legislative  item,  from  comprehensive  immigration  reform  to  gun  control  to  budget  and  sequestration  battles,  are  likely  to  be  critically  evaluated  through  a  political  prism  hardened  by  2012  campaign  data.  Believing  that  it  holds  the  high  ground  on  a  wide  range  of  issues  and  buttressed  by  a  variety  of  factors  -­‐-­‐  the  President’s  job  approval  numbers;  the  “which  party  do  you  trust  more”  polling;  the  ongoing  internal  civil  war  in  the  GOP,  Presidential  control  over  the  national  bully  pulpit  and  the  compelling  demographic  changes  ongoing  in  contemporary  America-­‐-­‐  the  White  House  holds  the  political  upper  hand  for  the  near-­‐term.  As  a  result,  we  expect  little  compromise  from  the  Administration.      The  President’s  second  term  affords  him  the  opportunity  to  pursue  domestic  agenda  items  that  remained  unfinished  business  after  his  first  four  years:    

• growing  income  inequality  (highlighted  by  minimum  wage  and  comprehensive  tax  reform  debates);    

• energy  and  conservation;    • “social  justice”  battles,  ranging  from  gun  control  to  gay  rights.    

 While  focusing  on  these  wide  ranging  agenda  items,  we  can  expect  the  White  House  to  operate  with  a  governing  calculus  that  the  pending  legislative/political  battlefield  affords  them  the  high  ground.  The  White  House  will  also  fiercely  leverage  and  maximize  its  institutional  campaign  capabilities  on  behalf  of  this  legislative  agenda.    When  the  legislative  process  cannot  produce  the  desired  result,  expect  the  Administration  to  turn  to  executive  action  in  pursuit  of  its  priorities.  The  National  Labor  Relations  Board  (NLRB),  for  example,  will  provide  a  much  friendlier  venue  for  redress  of  labor’s  agenda  than  will  Capitol  Hill.  The  issuance  of  new  regulations  by  Federal  agencies  may  supplant  regular  legislative  order  as  the  most  watched  vehicle  for  policy  enhancement.  The  President’s  use  of  executive  power  over  the  next  four  years  is  certain  to  lead  to  major  court  challenges  and  confrontation  with  House  and  Senate  Republicans.  In  reference  to  a  January  Appeals  Court  ruling  indicating  that  the  President  had  exceeded  his  constitutional  powers  in  the  NLRB’s  Noel  Canning  case,  Senator  Chuck  Grassley  (R-­‐IA)  recently  said:  “It’s  a  dangerous  road  he’s  going  down  contrary  to  the  spirit  of  the  Constitution.  Just  because  Congress  doesn’t  act  doesn’t  mean  the  President  has  the  right  to  act.”    This  sets  up  a  myriad  of  fights  over  Administration  executive  and  regulator  action.        

New Cabinet Positions

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Darcy Kohn � 2/15/13 10:57 AMComment [2]: Why cite NLRB here with the uncertainty around appointments? How about EPA?

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U.S.  Federal  Agency   Current/Nominated  Secretary  

*notes  nomination  

Outgoing  Secretary  

Dept.  of  Agriculture   Tom  Vilsack    Dept.  of  Commerce   Rebecca  Blank  (acting)    Dept.  of  Defense   Chuck  Hagel*   Leon  Panetta  Dept.  of  Education   Arne  Duncan    Dept.  of  Energy       Steven  Chu  Dept.  of  Health  and  Human  Services  

Kathleen  Sebelius    

Dept.  of  Homeland  Security   Janet  Napolitano    Dept.  of  Housing  and  Urban  Development    

Shaun  Donovan    

Department  of  Interior   Sandy  Jewell*   Ken  Salazar  Department  of  Justice   Eric  Holder    Dept.  of  Labor     Hilda  Solis  Dept.  of  State   John  Kerry   Hillary  Clinton  Dept.  of  Transportation     Ray  Lahood  Dept.  of  Treasury   Jack  Lew*   Tim  Geithner  Dept.  of  Veterans  Affairs   Eric  Shinseki    Central  Intelligence  Agency   John  Brennan*   David  Petraus  Environmental  Protection  Agency  

  Lisa  Jackson  

Office  of  Management  and  Budget  

Jeffrey  Zients  (acting)    

U.S.  Trade  Representative     Ron  Kirk  Securities  and  Exchange  Commission  

Mary  Jo  White*    

Consumer  Financial  Protection  Bureau    

Richard  Cordray*  (currently  serving-­‐  recess  appointment)  

 

NEW  WHITE  HOUSE  STAFF      Chief  of  Staff   Denis  McDonough   Jack  Lew  Deputy  National  Security  Advisor  

Tony  Blinken   Denis  McDonough  

Deputy  COS  for  Policy   Rob  Nabors   Nancy-­‐Ann  DeParle  Communications  Director   Jennifer  Palmieri   Dan  Pfeiffer  Senior  Advisor   Dan  Pfeiffer   David  Plouffe  Director  of  Legislative  Affairs   Miguel  Rodriguez   Rob  Nabors  

CONGRESS: SENATE

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 SENATE  DEMOCRATS  The  2012  elections  were  an  unexpected  boon  for  Senate  Democrats,  turning  what  most  thought  would  be  a  year  in  which  Democrats  lost  the  Senate  majority  into  one  where  they  gained  two  seats.  But  even  though  they  increased  their  majority  to  55  seats,  Senate  filibuster  rules  means  60  votes  are  still  required  for  Democrats  to  truly  control  the  Senate.  Even  with  new  curbs  on  the  filibuster,  60  votes  will  still  be  the  brass  ring  for  legislation  to  pass  the  Senate.  With  at  least  ten  incumbent  Senate  Democrats  facing  re-­‐election  in  2014  from  battleground  states,  the  challenge  is  even  greater  for  President  Obama’s  agenda.  However,  the  high  bar  to  Senate  passage  means  that  any  item  that  clears  the  Senate  hurdle  has  momentum  when  it  is  sent  to  the  House,  a  dynamic  that  proved  successful  on  budget-­‐related  deals  in  recent  months  and  one  which  will  be  in  play  in  the  113th.    Democratic  Agenda  Not  all  Senate-­‐passed  legislation  sailed  through  the  House  in  the  112th  Congress.  Notable  exceptions  were  the  Violence  Against  Women  Act  (VAWA),  the  farm  bill,  Postal  Service  reform,  and  the  Hurricane  Sandy  Supplemental  Appropriations  bill.  The  Senate  has  already  acted  again  this  year  on  a  bi-­‐partisan  basis  to  clear  a  new  version  of  the  Sandy  Supplemental,  similar  to  the  one  it  passed  in  the  waning  days  of  the  112th  Congress,  as  well  as  VAWA.  Majority  Leader  Harry  Reid  (D-­‐NV)  announced  in  January  that  the  Senate  would  revisit  the  other  major  Senate-­‐passed  legislation  that  failed  to  pass  the  House.      Senate  Democrats  in  late  January  also  laid  out  their  top  ten  bills  for  the  113th  Congress  which,  other  than  a  reauthorization  of  a  veteran’s  employment  bill  and  the  farm  bill  reauthorization,  are  essentially  a  statement  of  Democratic  legislative  priorities  and  principles.  Included  in  this  list  are  resolutions  calling  on  Congress  to  act  on:  immigration  reform;  issues  resulting  from  the  Sandy  Hook  massacre  embodied  in  Vice  President  Biden’s  gun  control  task  force  recommendation;  infrastructure  investment;  VAWA  reauthorization;  measures  to  prevent  the  impact  of  extreme  weather  events,  including  clean  energy  and  infrastructure  investments;  tax  loophole  reforms;  and,  election  and  campaign  finance  reforms.  Some  of  these  are  Democratic  perennials  but  others  are  a  new  response  to  recent  headline  news  events.  Either  way,  they  are  an  attempt  to  present  themes  that  have  widespread  popular  support  and  that  unify  the  Democratic  caucus.      Caucus  Dynamics  Among  these  caucus  members  are  a  number  of  Red-­‐  or  Purple-­‐state  freshmen  who  were  swept  into  office  during  the  Democratic  wave  election  of  2008  including  Senators  Kay  Hagan  (D-­‐NC),  Mark  Warner  (D-­‐VA),  Mark  Begich  (D-­‐AK),  Jeanne  Shaheen  (D-­‐NH),  and  Mark  Udall  (D-­‐CO).  All  except  Senator  Warner  could  face  a  tough  re-­‐election  challenge  and  even  Senator  Warner  will  likely  hew  to  a  moderate-­‐to-­‐conservative  line  based  on  past  performance.  Another  group  of  veteran  Democrats  will  face  the  voters  in  states  which  two  years  earlier  voted  decisively  against  President  Obama  including,  Senators  Max  Baucus  (D-­‐MT),  Mark  Pryor  (D-­‐AR),  Mary  Landrieu  (D-­‐LA),  and  Tim  Johnson  (D-­‐SD).  The  2014  Democrats  will  run  in  the  aftermath  of  a  big  class  of  nine  Democratic  freshmen  elected  in  2012,  three  of  whom,  Joe  Donnelly  (D-­‐IN),  Heidi  Heitkamp  (D-­‐ND),  and  Tim  Kaine  (D-­‐VA),  triumphed  in  challenging  climates  for  Democrats  and  one,  Angus  

Darcy Kohn � 2/15/13 10:59 AMDeleted:  –  especially  given  recent  practice  –  

Darcy Kohn � 2/15/13 11:52 AMDeleted: Red,  or  recently-­‐Purple  states

Darcy Kohn � 2/15/13 11:00 AMDeleted: the  112th  Congress

Darcy Kohn � 2/15/13 11:03 AMComment [3]: Already passed the House – need to reword in section.

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King  (I-­‐ME),  will  look  to  maintain  his  independence  from  the  Democratic  caucus  as  much  as  possible.  At  the  same  time,  new  liberal  Democratic  women  Senators  Elizabeth  Warren  (D-­‐MA)  and  Tammy  Baldwin  (D-­‐WI),  illustrate  the  diverse  ideological  range  of  this  freshmen  class  –  and  the  Democratic  caucus  as  a  whole  –  which  will  be  a  blessing  and  a  curse  to  Democratic  leadership.      For  the  most  part,  Democratic  leaders  should  expect  unity  on  most  bread-­‐and-­‐butter  economic  issues  that  define  the  party  such  as  infrastructure  investment  and  veterans’  employment.  On  other,  more  contentious  issues  such  as  gun  control  and  aspects  of  immigration  reform,  leadership  will  be  content  to  let  the  chips  fall  where  they  may  and  let  defectors  stray.  At  the  same  time,  the  Administration  will  actively  engage  its  campaign-­‐style  grassroots  operation  to  maximize  political  leverage  in  these  tough  debates  while  seeking  to  avoid  alienating  moderates  they  may  need  on  other  issues.        SENATE  REPUBLICANS    Senate  Republicans  now  hold  45  seats  and  remain  the  minority  opposition  to  the  President,  losing  two  seats  in  the  November  elections.  Senator  Mitch  McConnell  (R-­‐KY),  re-­‐elected  as  Minority  Leader,  leads  a  more  conservative  caucus  due  to  the  loss  of  moderates  from  the  caucus.  Senator  John  Cornyn  (R-­‐TX)  was  elected  Minority  Whip  while  Senators  John  Barrasso  (R-­‐WY)  and  John  Thune  (R-­‐SD)  kept  their  leadership  positions.    Significantly,  the  resolution  of  a  critical  debate  surrounding  Senate  rules  and  the  use  of  the  filibuster  avoided  an  otherwise  destructive  and  poisonous  issue.  The  agreement  sets  a  better  tone  for  the  collegial  body  beginning  its  work  in  the  113th  Congress.  The  critical  fiscal  issues  facing  the  Congress  early  in  the  session  will  be  a  true  test  of  the  rule  changes  and  the  early  comity  exhibited  in  the  Senate.      Only  13  Republican  Senators  are  up  for  re-­‐election  in  2014,  including  McConnell.  One,  Senator  Saxby  Chambliss  (R-­‐GA),  has  already  announced  his  retirement.  He  would  have  faced  a  more  conservative  opponent  in  the  Republican  primary.  Because  of  a  more  conservative  Republican  Senate  caucus  to  begin  this  session  and  more  political  challenges  from  the  far  right,  Members  will  be  reluctant  to  crossover  to  support  the  majority  of  the  Democratic  caucus  on  many  issues.  These  factors  will  make  achieving  the  60-­‐vote  supermajority  for  passage  of  most  legislation  a  greater  challenge.        Filibuster  Changes  The  new  filibuster  rules  changes  and  standing  orders,  agreed  to  by  the  Senate  in  late  January,  give  incremental  momentum  to  efforts  to  speed  up  debate,  which  has  bogged  down  in  recent  years  on  all  but  the  most  important  and  bi-­‐partisan  legislation  and  nominations.  Despite  the  changes,  the  majority  can  still  choose  the  traditional  path  on  debatable  motions  to  proceed  –  file  cloture,  wait  two  days,  invoke  cloture  if  60  votes  are  attainable,  wait  up  to  30  more  hours.  More  likely  will  be  the  process  under  the  new  standing  order  (good  only  for  the  duration  of  the  113th  Congress)  where  debate  is  expedited  at  the  price  of  guaranteeing  the  minority  two  amendments  of  its  choosing.      

Darcy Kohn � 2/15/13 11:06 AMComment [4]: This sentence suggests that Baldwin and Warren are problems – what if we said something like: “…freshmen class. The diversity of the Democratic caucus as a whole could be a blessing or a cure to Democratic leadership.

Darcy Kohn � 2/15/13 11:06 AMDeleted:  with  impunity

Darcy Kohn � 2/15/13 11:06 AMComment [5]: Should mention Hagel nomination now?

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In  recent  years,  both  parties  –  when  they’ve  been  in  the  majority  –  have  been  reluctant  to  allow  the  minority  to  offer  amendments  without  pre-­‐clearing  them.  The  prerogative  of  the  majority  leader  to  fill  the  amendment  tree,  and  block  minority  amendments,  has  resulted  in  a  chicken-­‐or-­‐the-­‐egg  blame  game  where  the  minority  has  responded  by  blocking  the  majority’s  efforts  to  proceed  to  favored  legislation.  Now,  at  least  two  amendments  of  the  minority’s  choosing  will  be  voted  on,  although  the  rules  changes  allow  the  majority  the  indirect  route  of  tabling  the  minority’s  amendments  by  a  majority,  not  a  supermajority,  vote.  But  it  has  been  this  reluctance  to  even  face  tough  votes  on  tabling  amendments  that  has  turned  the  Senate  into  not  much  more  than  an  elite  debating  society,  with  dueling  political  messaging  strategies.      In  order  to  make  progress  on  Democratic  agenda  items,  Majority  Leader  Reid  will  have  to  give  Republicans  votes  on  at  least  two  amendments,  no  matter  how  noxious  they  are  to  the  majority  of  Democrats,  or  tempting  to  vulnerable  moderate  Democrats.  This  will  be  a  feature  of  the  Senate  in  the  113th  Congress  that  bears  close  scrutiny.  If  there  is  bi-­‐partisan  satisfaction  with  this  baby  step,  it  could  be  made  permanent  in  the  Senate  rules  and  even  expanded-­‐upon  in  the  next  Congress.  Additionally,  the  reduction  in  post-­‐cloture  debate  time  on  sub-­‐cabinet  and  district  court  judicial  nominations  may  produce  an  incremental  uptick  in  executive  calendar  activity,  although  these  nominations  will  still  require  60  votes  if  they  face  determined  opposition.  This  may  be  the  only  consolation  available  to  the  Obama  Administration  in  the  wake  of  a  recent  court  decision  invalidating  the  President’s  pro  forma  recess  appointments  in  the  112th  Congress.      

CONGRESS: HOUSE OF REPRESENTATIVES  HOUSE  REPUBLICANS  Even  though  they  lost  seats,  the  Republicans  emerged  from  the  election  in  a  strong  position  in  the  House.  The  234-­‐Member  House  Republican  delegation  is  the  second  largest  since  1947.  Republicans  overwhelmingly  represent  safe  Congressional  districts  with  only  a  handful  elected  with  less  than  55%  of  their  electorate.  Republicans  are  likely  to  continue  to  control  the  House  through  the  remainder  of  the  decade  until  the  next  redistricting  occurs.  The  election  saw  the  continued  reduction  in  the  number  of  conservative  Blue  Dog  Democrats  whose  seats  were  claimed  by  conservative  Republicans.  Combined  with  the  defeat  and  departure  of  influential  moderate  Republicans,  the  result  is  a  more  polarized  House  of  Representatives.      Republican  Agenda    The  House  Republican  Leadership  will  adopt  a  more  deliberative  legislative  process  with  the  goal  of  confronting  Senate  Democrats,  rather  than  directly  challenging  the  President.  The  goal  will  be  to  force  Senate  Democrats  to  be  held  accountable  for  specific  policy  options  to  define  the  differences  between  the  two  political  parties  and  using  the  process  to  increase  pressure  on  moderate  Senate  Democrats  who  are  seeking  reelection  in  2014.  The  House  Republican  majority  will  adopt  a  new  “Senate  first”  strategy  of  deferring  to  the  Senate  to  act  first  on  contentious  legislation,  such  as  gun  control  and  immigration  reform.  The  House  Republicans  look  to  avoid  simply  passing  legislation  which  never  sees  the  light  of  day  in  the  Senate.  Instead,  

Darcy Kohn � 2/15/13 11:07 AMDeleted: So,  i

Darcy Kohn � 2/15/13 11:07 AMDeleted: The  Republican  majority  will  focus  on  the  economy  and  the  need  to  stop  what  they  see  as  excessive  government  spending.  

Darcy Kohn � 2/15/13 11:54 AMComment [6]: This sentence seemed like it was more of a priority, not the focus…

Darcy Kohn � 2/15/13 11:07 AMDeleted:  to  side  with  their  Republican  Senate  colleagues

Darcy Kohn � 2/15/13 11:07 AMDeleted: lots  of  

Darcy Kohn � 2/15/13 11:07 AMDeleted: quietly  

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they  will  use  the  tactic  of  sending  bills  to  the  Senate  that  moderate  Democrats  will  find  difficult  to  oppose.  There  also  will  be  much  more  emphasis  on  oversight  and  holding  the  Administration  responsible  for  how  the  implementation  of  its  highly  controversial  first  term  achievements,  the  Affordable  Care  Act  and  Dodd-­‐Frank,  are  proceeding.      House  Majority  Leader  Eric  Cantor  (R-­‐VA)  has  outlined  an  agenda  that  seeks  to  place  a  more  personal  touch  on  the  Republican  brand.  While  continuing  the  emphasis  on  traditional  Republican  goals  of  reducing  federal  spending,  tax  reform  and  maximizing  domestic  energy  development,  House  Republicans  will  examine  transportation  and  infrastructure  funding,    the  way  federal  funding  is  allocated  for  education,  immigration  policy  for  highly  skilled  workers,  agriculture  support  and  conservation  funding  programs  in  the  quadrennial  farm  bill,  and  legislation  addressing  the  implementation  of  the  Affordable  Care  Act.  Expanded  free  trade  will  be  another  priority  as  Republicans  target  policies  to  return  economic  growth  to  its  historic  norm  from  the  anemic  levels  registered  since  2008.      Conference  Dynamics    House  Republicans  have  been  split  into  two  factions  over  governance  of  the  House.  One  faction  feels  it  represents  a  mandate  from  their  constituents  to  support  a  limited  smaller  government.  This  group  believes  control  of  the  House  grants  the  power  to  govern  the  country  and  there  is  no  need  to  collaborate  with  the  President.  This  model  draws  inspiration  from  the  Gingrich  speakership  of  1995  and  the  Tea  Party  Republicans  of  2011  -­‐12.  The  other  faction  recognizes  you  cannot  govern  from  the  House  because  control  of  one  half  of  one  third  of  the  government  does  not  provide  the  power  needed  to  force  through  policy  positions,  demonstrated  most  recently  in  the  fiscal  cliff  showdown.  This  model  is  best  exemplified  by  Speaker  John  Boehner  (R-­‐OH)  and  Representative  Paul  Ryan  (R-­‐WI).    House  Republicans  are  at  risk  of  becoming  a  regional  southern  party.  The  Republican  House  majority  is  based  on  the  57  seat  advantage  it  holds  in  the  eleven  southern  states  stretching  from  Virginia  through  Texas.  Outside  the  Deep  South,  Democrats  hold  a  24-­‐seat  margin  in  the  House.  Redistricting  has  shifted  more  seats  away  from  the  northern  states  where  Democrats  are  strongest,  to  the  fast-­‐growing  southern  states  where  the  Republicans  dominate  rural  and  suburban  areas.  The  Deep  South  is  by  far  the  most  conservative  area  of  the  country  and  this  southern  Republican  dominance  heavily  affects  policy  decisions  and  internal  politics  within  the  entire  Republican  Conference.    For  example,  almost  90  percent  of  southern  Republicans  opposed  the  fiscal  cliff  budget  deal  while  a  majority  of  Republicans  from  outside  the  South  supported  the  fiscal  cliff  deal.  The  same  voting  patterns  emerge  with  the  recent  vote  on  aid  for  Hurricane  Sandy.  The  increased  regionalization  of  House  Republicans  creates  a  growing  perception  in  other  areas  of  the  country  that  the  party  is  a  Southern  and  rural  party.  Population  shifts  continue  to  erode  the  party’s  popularity  outside  of  the  South  and  rural  areas.                

Darcy Kohn � 2/15/13 11:07 AMDeleted: ,  particularly,  the  significant  number  of  moderates  who  face  reelection  in  2014

Darcy Kohn � 2/15/13 11:08 AMDeleted:  

Darcy Kohn � 2/15/13 11:09 AMMoved down [1]: Mid-­‐Term  Elections  Democrats  need  to  take  over  17  seats  to  gain  a  majority  in  the  House  of  Representatives.  That  will  be  difficult  to  achieve  in  a  midterm  election,  where  the  turnout  composition  is  much  different  than  in  a  Presidential  election  year,  and  where  the  President’s  party  in  Congress  has  a  long  record  of  losing  seats.  In  midterm  elections  since  1946,  the  President’s  party  has  lost  an  average  of  26  seats  in  the  House;  it  has  gained  seats  only  four  times  since  the  Civil  War,  most  recently  in  special  circumstances  in  1998  (a  reaction  to  the  Clinton  impeachment)  and  again  in  2002  (rallying  of  support  for  Bush’s  response  to  the  attacks  of  9-­‐11).  Turnout  in  Presidential  election  years  is  always  higher  because  of  the  greater  participation  of  minorities  and  youth  voters.  The  voter  turnout  among  these  groups  tends  to  be  lower  during  midterm  elections,  which  creates  an  older  less  diverse  electorate  that  favors  Republican  candidates.  Unless  the  turnout  composition  changes  historically  in  2014,  Democrats  will  have  to  substantially  out-­‐perform  their  2012  effort  to  win  control  of  the  House  with  a  likely  far  more  conservative  electorate.

Recent  redistricting  also  plays  a  much  greater  role  in  the  midterm  election.  The  2010  Congressional  redistricting  left  few  truly  competitive  seats  available  for  Democratic  takeover.  Democrats  will  have  to  win  some  conservative  districts  to  regain  the  majority.  Those  districts  with  their  less  diverse  and  older  constituencies  favor  Republicans  and  are  where  the  President’s  approval  becomes  a  much  greater  factor.

Another  mid-­‐term  election  factor  is  the  role  of  the  primary  election  in  safe  Congressional  districts.  It  is  well  known  that  a  highly  motivated  charismatic  challenger  can  defeat  an  incumbent  with  far  greater  financial  assets.  As  a  result,  incumbents  in  safe  districts,  both  urban  Democrats  and  rural  Republicans,  always  have  an  eye  on  the  possibility  of  a  primary  challenger.  The  potential  primary  focuses  incumbents  on  keeping  their  voting  records  as  close  as  possible  to  what  they  perceive  to  be  the  views  of  the  primary,  not  the  general,  electorate  in  their  Congressional  districts.  This  leads  to  more  conservative  Republican  and  more  liberal  Democratic  voting  patterns.

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   HOUSE  DEMOCRATS  In  2013,  House  Democrats  already  have  been  called  upon  to  deliver  votes  (and  the  majority)  for  major  legislative  initiatives.  The  fiscal  cliff  deal  (passed  in  the  last  days  of  the  112th  Congress)  and  the  Hurricane  Sandy  supplemental  appropriations  package  were  passed  only  after  Democrats  delivered  a  solid  majority  of  yes  votes  from  their  caucus.  With  the  House  GOP  caucus  searching  for  greater  cohesion,  House  Democrats  may  have  a  stronger  role  to  play  than  typically  afforded  to  a  House  minority  caucus.    The  House  Democratic  leadership  remains  largely  unchanged  from  the  previous  Congress.  Following  a  pickup  of  eight  seats  in  November’s  election,  Minority  Leader  Nancy  Pelosi  (D-­‐CA)  chose  to  lead  her  caucus  again  in  the  113th  Congress.  With  only  17  seats  between  Democrats  and  the  majority,  Leader  Pelosi  and  her  caucus  will  continue  to  search  for  opportunities  to  splinter  the  GOP  caucus  and  marginalize  House  Republicans  as  extreme  and  out-­‐of-­‐step  with  mainstream  America.  Opportunities  to  do  so  are  forthcoming,  with  debt  ceiling  and  government  funding  bills  on  the  horizon.    Mid-­‐Term  Elections    Democrats  need  to  take  over  17  seats  to  gain  a  majority  in  the  House  of  Representatives.  That  will  be  difficult  to  achieve  in  a  midterm  election,  where  the  turnout  composition  is  much  different  than  in  a  Presidential  election  year,  and  where  the  President’s  party  in  Congress  has  a  long  record  of  losing  seats.  In  midterm  elections  since  1946,  the  President’s  party  has  lost  an  average  of  26  seats  in  the  House;  it  has  gained  seats  only  four  times  since  the  Civil  War,  most  recently  in  special  circumstances  in  1998  (a  reaction  to  the  Clinton  impeachment)  and  again  in  2002  (rallying  of  support  for  Bush’s  response  to  the  attacks  of  9-­‐11).  Turnout  in  Presidential  election  years  is  always  higher  because  of  the  greater  participation  of  minorities  and  youth  voters.  The  voter  turnout  among  these  groups  tends  to  be  lower  during  midterm  elections,  which  creates  an  older  less  diverse  electorate  that  favors  Republican  candidates.  Unless  the  turnout  composition  changes  historically  in  2014,  Democrats  will  have  to  substantially  out-­‐perform  their  2012  effort  to  win  control  of  the  House  with  a  likely  far  more  conservative  electorate.    Recent  redistricting  also  plays  a  much  greater  role  in  the  midterm  election.  The  2010  Congressional  redistricting  left  few  truly  competitive  seats  available  for  Democratic  takeover.  Democrats  will  have  to  win  some  conservative  districts  to  regain  the  majority.  Those  districts  with  their  less  diverse  and  older  constituencies  favor  Republicans  and  are  where  the  President’s  approval  becomes  a  much  greater  factor.    Another  mid-­‐term  election  factor  is  the  role  of  the  primary  election  in  safe  Congressional  districts.  It  is  well  known  that  a  highly  motivated  charismatic  challenger  can  defeat  an  incumbent  with  far  greater  financial  assets.  As  a  result,  incumbents  in  safe  districts,  both  urban  Democrats  and  rural  Republicans,  always  have  an  eye  on  the  possibility  of  a  primary  challenger.  The  potential  primary  focuses  incumbents  on  keeping  their  voting  records  as  close  as  possible  to  what  they  perceive  to  be  the  views  of  the  primary,  not  the  general,  electorate  in  their  

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Congressional  districts.  This  leads  to  more  conservative  Republican  and  more  liberal  Democratic  voting  patterns.      

KEY POLICY ISSUES FOR THE 113th CONGRESS

BUDGET/FISCAL ISSUES Continuing  Resolution  Last  October,  Congress  approved  a  six-­‐month  continuing  resolution  (CR)  for  Fiscal  Year  2013,  which  expires  on  March  27,  2013.  By  that  date,  Congress  will  need  either  to  pass  the  appropriations  bills  (likely  in  the  form  of  an  omnibus)  or  advance  another  CR.  These  FY  2013  negotiations  have  taken  on  greater  import  given  the  decision  by  House  Republicans  to  bypass,  for  the  time  being,  a  high  stakes  fight  over  an  increase  in  the  federal  debt  ceiling.  Instead  of  repeating  the  2011  debt  ceiling  showdown,  they  decided  to  take  their  stand  on  further  spending  cuts  in  the  context  of  FY2013  funding.  House  Republicans  are  vowing  to  adhere  to  a  $974  billion  cap  on  discretionary  spending—a  considerable  sum  below  the  previously  assumed  $1.047  in  annual  discretionary  spending  level  found  in  the  six  month  CR  passed  in  October.  Additionally,  Congress  must  consider  the  debt  limit  extension  by  late  summer.      Sequestration    The  failure  of  the  Joint  Select  Committee  on  Deficit  Reduction,  or  the  so-­‐called  “Super  Committee,”  to  identify  $1.2  trillion  in  spending  cuts  over  the  next  decade  triggered  budget  sequestration  that  was  set  to  occur  on  January  2,  2013.  But  on  January  1,  2013,  the  House  and  Senate  passed  H.R.  8,  “The  American  Taxpayer  Relief  Act”  (ATRA),  which  delayed  the  sequester  until  March  1,  giving  Congress  additional  time  to  develop  legislation  that  would  prevent  the  budget  cuts  from  taking  effect.  To  offset  the  two-­‐month  delay,  discretionary  spending  caps  were  lowered  and  the  eligibility  to  convert  Individual  Retirement  Accounts  (IRA)  to  Roth  IRAs  was  expanded.  More  on  the  specifics  of  sequestration  can  be  found  here.          As  the  threat  of  sequestration  draws  closer,  President  Obama  has  made  several  statements  about  the  need  for  a  “balanced”  package  of  short-­‐term  spending  cuts  and  tax  reforms  that  will  help  the  country  avoid  the  sequester.  He  has  referenced  the  budget  and  tax  issues  that  he  and  Speaker  Boehner  discussed  during  negotiations  in  December  including  carried  interest;  oil  and  gas  industry  tax  benefits;  corporate  aircraft  depreciation;  and  a  cap  on  itemized  deductions  for  the  wealthy.  During  his  State  of  the  Union  Address,  the  President  advocated  for  additional  ways  to  achieve  savings,  including  reducing  taxpayer  subsidies  to  prescription  drug  companies,  asking  the  wealthiest  seniors  to  pay  more  and  changing  the  way  the  government  pays  for  Medicare  to  achieve  the  health  care  savings  (as  proposed  by  the  Simpson-­‐Bowles  commission).    

The  Congressional  response  to  the  looming  sequester  has  been  mixed.  Although  Members  from  both  parties  have  expressed  a  desire  to  halt  sequestration,  there  have  been  few,  if  any,  proposals  that  would  receive  bipartisan,  bicameral  support.  Senate  Majority  Leader  Reid  has  

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met  with  Speaker  Boehner  to  discuss  the  possibility  of  a  plan  with  reports  of  no  progress  being  made.  Additionally,  in  recent  statements  Speaker  Boehner,  when  discussing  a  compromise,  stated  that  it  is  “time  for  the  Senate  to  do  its  job,”  and  proclaimed  that  the  House  would  wait  to  see  what  sort  of  package  Senate  Democrats  propose  before  addressing  the  issue  further.  Senate  Democrats  produced  a  package  that  included  new  tax  revenue,  cuts  to  agriculture  subsidies  and  more  targeted  defense  cuts.  

Calendar of Near-Term Fiscal Issues  

February  § Shaded  Red  boxes  =  Legislative  work  days

Sun Mon Tues Wed Thurs Fri Sat 17 18  

House  &  Senate  District/State  Work  Period  

19  House  &  Senate  District/State  Work  Period  

20  House  &  Senate  District/State  Work  Period  

21  House  &  Senate  District/State  Work  Period  

22  House  &  Senate  District/State  Work  Period  

23

24 25 26 27 28

March   1

Sequestration  Triggered

2

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25  

House  &  Senate  District/State  Work  Period  

26  House  &  Senate  District/State  Work  Period  

27  House  &  Senate  District/State  Work  Period  CR  Expires  After  Session  Sequestration  

28  House  &  Senate  District/State  Work  Period  

29  Good  Friday  House  &  Senate  District/State  Work  Period  

30

31 Easter

Appropriations Once  considered  the  most  plum  of  assignments,  the  Appropriations  Committee  has  suffered  under  the  weight  of  Washington  gridlock  and  the  continuing  Congressional  battle  over  the  nation’s  fiscal  policies.  Last  year,  not  a  single  annual  appropriations  bill  was  enacted  into  law—the  latest  example  of  the  deleterious  trend  away  from  regular  legislative  order.  This  broken  process,  the  ongoing  pressure  to  cut  spending,  and  the  renewed  ban  on  earmarks  were  enough  to  help  dissuade  two  senior  Democratic  senators  from  chairing  the  committee  following  the  death  of  Senator  Daniel  Inouye  (D-­‐HI)  in  December.      

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 On  a  bicameral  and  bipartisan  basis,  Congressional  appropriators  are  pledging  to  restore  regular  order  in  the  appropriations  process,  but  that  goal  is  likely  to  remain  out  of  reach  unless  Congressional  leaders  agree  on  a  broader  budgetary  framework.  They  will  have  their  first  opportunity  to  hammer  out  such  a  framework  in  the  coming  weeks  as  Congress  works  to  wrap  up  fiscal  2013  appropriations  bills.      Even  as  Congress  considers  its  legislative  options  for  funding  government  through  the  remainder  of  FY  2013,  appropriators  will  have  to  begin  the  fiscal  2014  process.  The  FY  2014  appropriations  cycle  also  is  likely  to  get  off  to  a  rocky  start.  The  Obama  Administration  is  signaling  that  it  will  not  send  up  its  budget  request  to  Congress  until  March,  calling  into  question  the  timing  of  the  House  and  Senate  budget  resolutions.  These  budget  resolutions  provide  the  appropriations  committees  the  topline  spending  numbers  that  become  the  basis  for  the  subcommittee  302(b)  allocations.  This  delayed  start  and  ongoing  Congressional  battle  over  spending  will  only  strain  efforts  by  appropriators  to  restore  regular  order  in  the  appropriations  process,  and  as  a  result,  it  will  again  be  unlikely  that  Congress  passes  each  of  the  12  spending  bills  before  the  start  of  the  new  fiscal  year  (which  hasn’t  occurred  since  1993).      Senate  Appropriations  Committee  The  Senate  Appropriations  Committee  will  have  new  leadership  in  the  113th  Congress.  Senator  Barbara  Mikulski  (D-­‐MD)  was  named  Chair  of  the  Committee  in  December.  Senator  Richard  Shelby  (R-­‐AL)  is  the  Committee’s  new  Ranking  Member,  replacing  Senator  Thad  Cochran  (R-­‐MS)  who  moved  to  be  the  top  Republican  on  the  Agriculture  Committee.  New  members  of  the  Committee  include  Senators  Tom  Udall  (D-­‐NM),  Jeanne  Shaheen  (D-­‐NH),  Jeff  Merkley  (D-­‐OR),  Mark  Begich  (D-­‐AK),  Mike  Johanns  (R-­‐NE)  and  John  Boozman  (R-­‐AR).      In  assuming  the  leadership  of  the  committee,  Chairwoman  Mikulski  stated,  “Our  committee  will  function  in  a  way  that  is  open,  transparent  and  follows  regular  order.”  She  underscored  the  need  to  work  in  bipartisan  fashion  to  “meet  our  national  security  needs  but  also  the  compelling  human  needs  in  this  country.”      House  Appropriations  Committee  Representative  Harold  Rogers  (R-­‐KY)  returns  as  chairman  of  the  House  Appropriations  Committee.  He  welcomes  new  members:  Jeff  Fortenberry  (R-­‐NE),  Tom  Rooney  (R-­‐FL),  Chuck  Fleischmann  (R-­‐TN),  Jaime  Herrera  Beutler  (R-­‐WA),  and  two  freshmen,  David  Joyce  (R-­‐OH)  and  David  Valadao  (R-­‐CA).    On  the  Democratic  side,  Representative  Nita  Lowey  won  her  bid  to  replace  the  now  retired  Representative  Norm  Dicks  (D-­‐WA)  as  Ranking  Member  of  the  committee.  Tim  Ryan  (D-­‐OH)  and  Debbie  Wasserman-­‐Schultz  return  to  the  Committee  after  a  two  year  hiatus,  joined  by  new  members  Henry  Cuellar  (D-­‐TX),  Chellie  Pingree  (D-­‐ME),  Mike  Quigley  (D-­‐IL)  and  Bill  Owens  (R-­‐NY).      Chairman  Rogers  is  already  warning  the  committee  members  that  “we’re  going  to  be  squeezed  like  we’ve  never  been  squeezed  before  with  a  [budget  allocation]  that’s  going  to  be  severe.”  

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This  ominous  message  portends  tough  decisions  and  spirited  debate  within  the  committee.  Chairman  Rogers  has  also  suggested  that  the  Committee  will  bolster  its  oversight  activities  to  keep  busy  while  waiting  for  the  President’s  budget  request.      Earmarks  Efforts  by  earmarking  proponents  to  reconsider  their  use  in  the  annual  spending  bills  have  failed  to  gain  traction.  President  Obama  has  said  that  he  will  veto  spending  bills  with  earmarks,  and  House  Republicans  have  renewed  their  commitment  to  reject  any  legislation  that  includes  earmarks  for  the  113th  Congress.  In  the  Senate,  appropriators  are  more  reluctant  to  formally  foreclose  the  possibility  of  earmarks,  but  there  is  no  clear  path  for  a  return  to  earmarking  this  year  and  likely  next.    

Agriculture Enactment  of  a  new  long-­‐term  farm  bill  will  be  the  most  pressing  agriculture  issue  in  the  new  Congress.  H.R.  8,  “The  American  Taxpayers  Relief  Act  of  2012,”  provided  for  a  temporary  extension  of  the  current  farm  bill  through  the  end  of  September  2013.  This  will  give  Congress  more  time  to  consider  the  many  thorny  issues  that  have  bedeviled  consideration  of  a  new  farm  bill  to  date.  The  work  in  both  the  House  and  Senate  in  2012  to  draft  farm  legislation  will  help  jump  start  the  legislative  process.  However,  as  the  need  for  deficit  reduction  forces  further  spending  cuts  in  agricultural  accounts,  the  competition  for  scarce  funds  will  only  fan  longstanding  controversies  over  commodity  price  supports,  crop  insurance  premium  subsidies,  Supplemental  Nutrition  Assistance  Program  (SNAP)  outlays,  disaster  assistance  programs  and  the  “orphan”  programs  that  were  not  part  of  the  temporary  extension  of  current  law  and  lack  CBO  baselines  beyond  September  2012.    In  2012  there  was  general  consensus  around  the  need  to  eliminate  direct  payments  to  farmers.  However,  that  consensus  was  based  on  a  trade-­‐off—do  away  with  direct  payments  in  exchange  for  a  “shallow  loss”  revenue  program  that  would  work  in  tandem  with  crop  insurance  to  provide  protection  against  reduced  yields  and  low  prices.  This  appealed  to  corn,  soybean  and  wheat  producers  but  caused  heartburn  for  rice,  peanut  and  cotton  farmers  who  prefer  the  target-­‐price  format  of  current  farm  programs.  This  issue  remains.  With  Senator  Cochran    assuming  the  position  of  ranking  Republican  on  the  Senate  Agriculture  Committee,  southern  crops  can  expect  more  favorable  consideration  in  a  new  farm  bill.    Crop  insurance  will  be  subjected  to  scrutiny  given  the  large  outlays  incurred  as  a  result  of  the  current  drought.  Attention  will  focus  on  reducing  premium  subsidies  and  limiting  payments  based  on  a  farmer’s  income.    Most  of  the  savings  associated  with  both  the  Senate  and  House  versions  of  the  farm  bill  were  derived  from  SNAP  (formerly  known  as  food  stamps).  But  there  was  a  big  difference  in  the  level  of  SNAP  savings  between  the  Senate  and  House  bills.  It  was  this  disparity,  by  and  large,  which  kept  House  Republican  leaders  from  bringing  the  farm  bill  to  the  floor.  Controversy  around  SNAP  will  continue  to  rage  in  the  new  Congress.  

Darcy Kohn � 2/15/13 11:16 AMComment [7]: Believe both the House and Senate GOP have an internal prohibition against earmarks. Need to note?

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 Disaster  assistance  for  livestock  producers  lapsed  in  2011  and  it  had  been  assumed  that  such  assistance  would  be  renewed  in  the  rewrite  of  the  farm  bill.  When  the  record-­‐setting  drought  struck  the  nation  last  summer,  livestock  producers  were  especially  hard  hit,  as  feed  costs  sky-­‐rocketed,  pastures  dried  up  and  relief  in  the  form  of  emergency  disaster  payments  was  unavailable.  The  short-­‐term  extension  of  the  current  farm  bill  did  nothing  to  address  this  situation,  and  so  livestock  producers  continue  to  be  exposed  to  natural  disaster  emergencies  the  way  row-­‐crop  farmers  are  not.    Producers  of  fruits  and  vegetables,  organic  farmers  and  conservationists  did  not  fare  well  in  the  farm  bill  extension.  Programs  benefiting  these  parties  were  among  those  whose  “orphan”  status  prevented  them  from  being  continued.  Moreover,  because  they  have  no  CBO  budget  baselines,  inclusion  of  these  programs  in  a  new  long-­‐term  farm  bill  will  require  Congress  to  find  as  much  as  $10  billion  in  additional  offsets  in  order  to  fund  them.      Developments  on  the  various  fiscal  and  budget  fronts  will  shape  the  timing  and  substance  of  the  farm  bill.  Continued  stalemate  on  those  matters  could  result  in  another  short-­‐term  extension  of  the  farm  bill  in  the  fall.    

Defense With  budget  sequestration  widely  expected  to  reduce  FY  2013  defense  spending  by  $43  billion,  the  Pentagon  has  already  begun  implementing  a  civilian  hiring  freeze  and  a  possible  temporary  furlough  of  the  department’s  791,000  civilian  employees.  However,  the  Congressional  appropriations  committees  will  have  an  opportunity  to  address  this  issue  in  whatever  action  they  take  to  respond  to  the  March  27  expiration  of  the  current  CR.  Sequestration  is  expected  to  have  across-­‐the-­‐board  application  for  all  Department  of  Defense  (DoD)  programs,  projects  and  activities.  This  will  have  a  significant  downward  impact  on  force  structure,  research  and  development  spending  and  new  procurement  and  acquisition,  including  total  units  ordered.  The  defense  industrial  base  will  likely  experience  substantial  contraction,  depending  on  the  duration  of  the  sequester,  unless  Congress  and  the  President  can  agree  on  a  long-­‐term  budget  solution.    In  this  very  uncertain  period,  defense  authorizers  and  appropriators  will  be  challenged  to  set  spending  levels  and  make  choices  among  competing  priorities.  Big  ticket  items  would  appear  to  be  most  vulnerable,  including  shipbuilding,  aircraft  production  and  ground  vehicle  fleets.  Another  casualty  will  almost  certainly  be  much  needed  reform.  In  2001,  then-­‐Secretary  Donald  Rumsfeld  launched  a  series  of  studies  looking  at  reform  of  the  military  personnel  and  retirement  system,  procurement  reform,  among  others.  But  these  efforts  were  overwhelmed  by  the  need  to  respond  to  9/11.  After  eleven  years  of  preoccupation  with  war  in  Iraq  and  Afghanistan,  there  is  little  reason  to  hope  that  those  efforts  can  easily  be  reignited  under  the  added  strain  of  sequestration.  In  his  State  of  the  Union  message,  President  Obama  said  that  over  the  next  year  34,000  troops  will  return  from  Afghanistan  and  by  the  end  of  2014,  “the  war  in  Afghanistan  will  be  over.”  U.S.  commitment  beyond  2014,  according  to  the  President,  will  

Darcy Kohn � 2/15/13 11:18 AMComment [8]: No mention of Committee leadership, Committees or Hagel nomination. Should mention Inhofe replacing McCain?

Darcy Kohn � 2/15/13 11:18 AMDeleted: Our  

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focus  on  training  and  equipping  Afghan  forces  to  carry  out  their  own  security.  In  addition,  the  U.S.  will  continue  to  assist  countries  across  the  Middle  East  to  provide  their  own  security  against  Al  Qaida  and  other  extremists.  That  said,  the  withdrawal  from  Iraq  and  the  drawdown  from  Afghanistan,  combined  with  unprecedented  budget  pressures  and  a  new  defense  secretary,  may  be  a  winning  formula  for  taking  on  reform.

Education Committee  Changes    The  Senate  Health,  Education,  Labor  and  Pensions  (HELP)  Committee  will  see  a  change  in  its  leadership  with  Senator  Lamar  Alexander  (R-­‐TN)  now  serving  as  the  Ranking  Member.  Senator  Alexander  is  a  former  university  president,  Secretary  of  Education,  and  Governor  and  brings  great  experience  to  this  position,  particularly  in  addressing  education  issues.  The  overall  membership  of  the  HELP  Committee  did  not  change  dramatically  from  last  Congress.  Democrats  have  added  freshmen  Senators  Tammy  Baldwin  (D-­‐WI),  Chris  Murphy  (D-­‐CT)  and  Elizabeth  Warren  (D-­‐MA)  while  the  Republicans  have  added  freshmen  Senator  Tim  Scott  (R-­‐SC).  Senators  Michael  Bennet  (D-­‐CO),  Richard  Blumenthal  (D-­‐CT),  and  John  McCain  (R-­‐AZ)  have  departed  the  Committee.    The  House  Education  and  Workforce  Committee  did  not  see  any  changes  in  leadership  and  only  minimal  changes  in  its  membership.  Republicans  added  three  freshmen  Representatives  Susan  Brooks  (R-­‐IN),  Richard  Hudson  (R-­‐NC),  and  Luke  Messer  (R-­‐IN)  while  asking  Representatives  Tom  Price  (R-­‐GA),  Brett  Guthrie  (R-­‐KY),  Kenny  Marchant  (R-­‐TX),  and  Matt  Salmon  (R-­‐AZ)  to  return  to  the  Committee  after  not  serving  on  the  Committee  in  the  last  Congress.  Democrats  did  not  add  any  freshmen  to  their  roster  on  the  committee  but  asked  Representatives  Joe  Courtney  (D-­‐CT),  Marcia  Fudge  (D-­‐OH),  Jared  Polis  (D-­‐CO),  Gregorio  Sablan  (D-­‐MP),  John  Yarmouth  (D-­‐KY),  Fredrica  Wilson  (D-­‐FL)  to  re-­‐join  the  Committee  in  the  113th  Congress  and  Representative  Suzanne  Bonamici  (D-­‐OR)  to  serve  for  the  first  time  on  the  Committee.      Elementary  and  Secondary  Education  Act  Two  major  reauthorization  bills  will  dominate  the  education  agenda  in  the  House  and  Senate  during  the  113th  Congress.  The  first  is  the  “Elementary  and  Secondary  Education  Act”  (ESEA).  The  last  time  ESEA  was  reauthorized  was  early  in  President  George  W.  Bush’s  first-­‐term  through  the  “No  Child  Left  Behind  Act”  because  of  the  rigorous  testing  requirements  it  imposed  on  states.  Efforts  to  reauthorize  this  law,  however,  have  stalled  over  the  past  several  Congresses.  The  Obama  Administration,  growing  frustrated  with  the  lack  of  legislative  progress,  began  issuing  waivers  to  states  for  certain  key  provisions  of  ESEA.  At  this  time,  thirty-­‐four  states  have  received  ESEA  requirement  waivers  from  the  Department  of  Education,  and  seven  more  have  proposals  for  waivers  under  review.  Many  Members  of  Congress  would  prefer  that  Congress  rewrite  the  ESEA  completely,  rather  than  allow  the  Department  of  Education  to  use  its  administrative  authority  to  effectively  change  the  law  on  a  state-­‐by-­‐state  basis.    The  House  Education  and  Workforce  Committee  and  the  Senate  HELP  Committee  have  ESEA  reauthorization  high  on  the  agenda  for  the  committees  with  consideration  likely  following  completion  of  a  reauthorization  bill  for  the  Workforce  Investment  Act.    

Darcy Kohn � 2/15/13 11:18 AMDeleted: we  

Darcy Kohn � 2/15/13 11:19 AMDeleted: U

Darcy Kohn � 2/15/13 11:19 AMDeleted: P

Darcy Kohn � 2/15/13 11:20 AMDeleted: all  

Darcy Kohn � 2/15/13 11:20 AMDeleted: when  the  reauthorization  law  was  referred  to  as

Darcy Kohn � 2/15/13 11:20 AMDeleted: The  “No  Child  Left  Behind  Act,”  a  five  year  authorization  bill,  was  signed  into  law  early  in  2002.  

Darcy Kohn � 2/15/13 11:20 AMDeleted: Health,  Education,  Labor  and  Pensions  (

Darcy Kohn � 2/15/13 11:21 AMDeleted: )

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 Higher  Education  Act  The  second  big  education  reauthorization  on  the  agenda  for  the  113th  Congress  is  the  “Higher  Education  Act”  which  does  not  lapse  until  2014.  However,  Congress  and  the  Administration  will  be  facing  a  defining  moment  on  June  30,  2013,  when  the  interest  rates  on  subsidized  Stafford  Loans  made  to  undergraduate  students  could  jump  from  3.4  to  6.8  percent.  In  2007,  Congress  passed  the  “College  Cost  Reduction  Act”  (CCRA),  which  cut  these  interest  rates  in  half  over  a  five-­‐year  period.  Last  year  Congress  passed  a  one-­‐year  extension  of  the  current  3.4  percent  rate  on  these  loans.  The  need  to  address  this  issue  before  next  year  could  spark  efforts  to  begin  the  reauthorization  of  the  student  aid  provisions  in  the  Higher  Education  Act  this  year,  well  before  its  expiration  date.      Another  popular  student  aid  program,  Pell  Grants,  received  some  good  news  earlier  this  year.    Many  had  expected  the  Pell  Grants  program  to  face  a  budget  shortfall  this  year.  However,  the  Congressional  Budget  Office  estimated  that  under  the  new  policy  baseline  released  on  February  5,  the  Pell  Grants  program  has  a  surplus  balance  of  $9.3  billion  of  funds  not  used  in  fiscal  year  2013.  With  news  of  the  Pell  Grant  surplus,  there  is  not  likely  to  be  any  legislative  action  on  the  Pell  Grant  program  in  2013.    

Energy and Environment President  Obama  sought  energy  reform  and  climate  change  legislation  during  his  first  term  and  reaffirmed  his  commitment  during  both  his  second  Inaugural  and  this  year’s  State  of  the  Union  Addresses,  saying  that  if  Congress  does  not  act,  he  will.    A  divided  Congress,  however,  suggests  much  of  the  energy  policy  activity  will  be  driven  by  the  Executive  Branch  while  Congress  attempts  to  tackle  energy/climate  policy  through  either  a  comprehensive  approach  or  through  more  modest  legislative  efforts.  No  major  energy  legislation  has  passed  Congress  since  2007  and  prospects  for  a  successful  comprehensive  bill  are  slight.  However,  in  the  next  two  years,  advocates  of  robust  energy  and  climate  reform  will  continue  to  lay  the  groundwork  for  a  time  when  comprehensive  legislation  can  be  enacted.    While  energy  policy  and  its  impact  on  climate  will  be  in  the  forefront  of  the  policy  debate,  it  is  unlikely  the  113th  Congress  will  muster  the  huge  political  and  regional  tradeoffs  needed  to  fashion  a  comprehensive  energy  bill.  Although  lightning  could  strike  and  lead  to  major  compromises  on  energy  regulatory  decisions,  smaller  but  still  significant  legislative  skirmishes  are  more  likely  and  could  collectively  alter  the  energy  landscape  and  affect  energy  industry  investments.      ADMINISTRATION  The  President’s  2nd  term  will  see  a  significant  change  in  the  makeup  of  his  Cabinet  with  jurisdiction  over  energy  policy.  Most  significantly,  Energy  Secretary  Stephen  Chu  and  the  Administrator  of  the  Environmental  Protection  Agency  (EPA),  Lisa  Jackson,  will  be  stepping  down.  This  provides  an  opportunity  to  revisit  the  EPA’s  aggressive  (many  say  heavy-­‐handed)  regulatory  approach  that  has  focused  largely  on  fossil  fuel  extraction  and  emissions.  Despite  a  

Darcy Kohn � 2/15/13 11:21 AMDeleted: While  some  candidates  for  the  job  are  considered  more  moderate  than  the  outgoing  Administrator

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new  EPA  Administrator,  it  is  unlikely  that  the  Administration  will  change  course  on  its  regulatory  goals  in  this  area  and  the  President  has  signaled  that  he  intends  to  use  the  tools  available  under  existing  laws,  like  the  Clean  Air  Act,  to  shape  climate  and  energy  policy  going  forward.  Also  departing  is  Interior  Secretary  Ken  Salazar,  who  has  overseen  energy  exploration  on  federal  lands,  and  the  nominee  to  replace  him,  REI  CEO  Sally  Jewel,  brings  an  interesting  mix  of  business  acumen,  technical  experience  in  oil  and  gas,  and  a  commitment  to  natural  resource  protection.  Additionally,  the  new  Secretary  of  State,  John  Kerry  promises  to  be  aggressive  in  pursuing  international  action  on  climate  change  which  could  increase  pressure  on  the  Administration  to  deliver  on  the  domestic  front.      POLICY  AGENDA  The  Executive  Branch  will  dictate  the  fate  of  three  major  policy  issues:  construction  of  the  Keystone  XL  pipeline,  applications  to  export  domestic  natural  gas  to  foreign  markets,  and  the  nature  of  further  carbon  regulations  for  new  (and  potentially  current)  sources  of  emissions.  These  decisions  and  potentially  others  will  have  longstanding  and  significant  impacts  on  the  future  of  energy  policy  and  have  the  potential  to  fundamentally  change  the  nature  of  economic  drivers  in  the  United  States.  They  are  also  likely  to  trigger  legislative  efforts  to  affect  the  Executive  Branch  decisions.      Keystone  Pipeline  A  decision  on  the  Keystone  XL  pipeline  is  due  in  2013,  coincidentally  around  the  time  the  next  wave  of  major  budget  and  fiscal  negotiations  come  to  a  head.  While  the  State  Department  has  had  a  major  role  in  the  development  of  Administration  policy  regarding  the  pipeline,  and  incoming  Secretary  John  Kerry  is  a  strong  advocate  for  an  international  climate  change  regime,  the  ultimate  decision  will  rest  with  President  Obama.  The  President’s  base  is  split  over  this  issue,  with  labor  unions  in  support  of  the  pipeline’s  construction  and  most  environmentalists  opposed.  It  is  possible  that  a  decision  to  proceed  with  the  pipeline  will  be  coupled  with  a  demand  from  the  Administration  for  investment  in  renewable  energy  and  energy  efficiency  programs  or  other  progress  on  broader  climate  issues.    Natural  Gas  Exports  The  Administration  is  expected  to  decide  whether  to  grant  approval  to  build  liquefied  natural  gas  (LNG)  export  terminals,  for  which  15  applications  were  pending  at  the  Energy  Department  as  of  December  of  last  year.  The  domestic  natural  gas  boom  is  seen  as  a  future  game  changer  for  the  U.S.  economy  and  for  major  international  markets,  but  it  has  already  fundamentally  altered  the  economics  of  other  energy  sources  including  coal,  nuclear  and  renewables.  Studies  conflict  over  the  impact  that  LNG  exports  will  have  on  the  upward  price  of  natural  gas,  which  will  be  determining  factor  in  the  ultimate  decision  of  whether  to  grant  export  approval.  Energy  and  Natural  Resources  Chairman  Ron  Wyden  (D-­‐OR)  has  been  skeptical  of  natural  gas  exports  and  will  use  his  committee’s  gavel  to  influence  the  decision  making  process.    Carbon  Emissions  EPA  is  scheduled  in  2013  to  issue  its  final  rule  on  carbon  emissions  performance  standards  for  new  fossil-­‐fueled  power  plants.  As  a  result,  all  new  coal-­‐fired  units  would  be  required  to  install  expensive  emissions  control  technologies  or  shift  to  cleaner  fuel  sources.  By  regulating  new  

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sources,  EPA  would  trigger  a  requirement  of  the  Clean  Air  Act  to  issue  similar  standards  for  existing  sources,  a  process  that  could  take  several  years.  By  all  accounts,  the  new  source  rule  (coupled  with  the  existing  sources  rule)  will  touch  all  sectors  of  the  economy  and  continue  to  marginalize  coal  as  a  viable  energy  fuel.  EPA  also  will  study  the  issues  of  hydraulic  fracturing  (fracking),  coal  ash  and  other  sensitive  issues  with  wide-­‐ranging  impacts.  Aggressive  regulatory  approaches  are  likely  and  will  increase  pressure  on  Congress  to  act,  either  to  block  regulations  or  to  substitute  legislative  compromise  for  agency  action.  Republicans  in  Congress  (along  with  coal-­‐friendly  Democrats)  will  continue  attempts  to  challenge  the  EPA  wherever  possible.  A  successful  effort  to  put  this  to  a  vote  in  the  Senate  could  put  moderate  Democrats  in  a  tough  position  creating  the  possibility  of  either  action  to  limit  EPA’s  authority  or  a  political  issue  that  can  be  used  against  them  in  the  election.  The  President’s  support  in  his  State  of  the  Union  address  for  market-­‐based,  bipartisan  Congressional  approaches  on  climate,  like  those  advanced  by  Senators  John  McCain  and  Joe  Lieberman  (I-­‐CT)  a  few  years  ago,  will  have  an  uphill  climb  that  is  not  likely  to  succeed  unless  industry  can  unite  behind  an  approach  acceptable  to  the  White  House.    CONGRESS  In  Congress,  incoming  Chairman  of  the  Senate  Energy  &  Natural  Resources  Committee  Wyden  and  incoming  Ranking  Member  of  the  Senate  Environment  &  Public  Works  David  Vitter  (R-­‐LA)  represent  major  leadership  changes.  Senator  Wyden  in  particular  is  reaching  across  the  aisle  to  find  ways  to  work  with  Ranking  Member  Lisa  Murkowski  (R-­‐AK)  and  with  coastal  state  Senators  interested  in  promoting  expanded  energy  exploration  through  revenue  sharing  or  oil  and  gas  royalties.  Tradeoffs  are  possible  but  politically  challenging.  The  smart  money  says  they  will  not  succeed  but  an  effort  to  fashion  a  comprehensive  bill  can’t  be  ruled  out.  In  the  House,  Ed  Markey  (D-­‐MA),  Ranking  Member  of  the  House  Natural  Resources  Committee,  is  running  for  the  open  Massachusetts  Senate  seat.      While  the  Administration  will  be  driving  many  of  the  energy  policy  decisions  during  the  next  two  years,  the  opportunity  remains  for  Congress  to  play  a  significant  role  in  the  future  of  America’s  energy  landscape.  Comprehensive  tax  reform  is  on  the  table  but  is  likely  to  be  a  multi-­‐year  process.  As  part  of  that,  a  number  of  energy-­‐related  measures  will  be  considered.  At  a  minimum,  the  various  tax  incentives  for  oil  and  gas  as  well  as  renewables  will  be  in  the  mix.    In  an  effort  to  streamline  the  tax  code,  many  of  the  energy  incentives  will  be  on  the  chopping  block,  generating  great  activity  from  interest  groups  and  advocates  on  Capitol  Hill.  Through  this  debate,  specific  subsidies  may  be  traded  for  a  more  robust  policy  on  federal  investment  in  energy  and  its  related  technologies.  One  measure  proposed  by  the  President  is  tying  oil  and  gas  revenue  growth  to  investments  in  clean  energy.  In  addition,  a  proposal  to  raise  revenue  through  a  carbon  tax  regime  may  be  considered.  The  Obama  Administration  has  said  it  will  not  take  the  lead  on  advancing  a  carbon  tax  proposal,  leaving  the  issue  to  Congress.  Taxing  carbon  would  raise  billions  of  dollars  annually  but  will  be  fought  from  many  quarters  in  Congress  and  is  unlikely  to  be  included  in  any  final  reform  package.      Congress  may  also  attempt  to  muster  agreement  on  a  more  modest  package  of  energy  reforms  focused  on  energy  efficiency  and  renewable  energy  either  as  part  of  a  larger  effort  or  

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separately.  Members  of  both  parties  are  seeking  common  ground  on  authorizing  legislation  for  energy  conservation  programs  in  the  federal  and  commercial  markets,  and  the  Administration  will  pursue  greater  energy  efficiency/renewable  standards  through  executive  orders  and  rulemakings.    For  the  past  several  years,  both  parties  have  advocated  an  “all  of  the  above”  energy  policy.  However,  the  two  sides  continue  to  talk  past  one  another.  We  believe  that  the  White  House,  through  unilateral  action,  will  drive  much  of  the  significant  activity  although  Congress  will  seek  to  have  a  role.  In  addition  to  their  oversight  role  and  the  prospect  of  delivering  consensus  on  more  modest  approaches,  an  effort  to  craft  something  broader,  particularly  if  consensus  on  other  measures  like  immigration  and  sequestration  paves  the  way  for  a  more  cooperative  and  effective  Congress  than  the  112th,  cannot  be  ruled  out.    

Financial Services Five  years  after  the  financial  crisis  began  and  nearly  three  years  after  the  epic  Dodd  Frank  omnibus  regulatory  response  was  signed  into  law,  the  outlook  for  banking  and  financial  services  activity  in  the  Congress  has  both  an  aggressive  and  go-­‐slow  look.  The  continued  very  slow  growth  of  the  economy  has  led  consumers  and  businesses  to  continue  deleveraging  their  financial  positions  and  maintaining  their  risk  adverse  outlook.  This  economic  backdrop  combined  with  the  zero  interest  rate  policy  of  the  Federal  Reserve  Board,  increased  capital  requirements  for  financial  institutions,  and  the  tsunami  of  new  federal  and  state  regulation,  has  resulted  in  formidable  challenges  for  the  financial  services  sector  of  the  economy.    ADMINISTRATION  The  113th  Congress  began  with  a  substantial  change  of  the  key  policymakers  in  the  financial  services  sector.  The  departure  of  Treasury  Secretary  Geithner  and  the  expected  confirmation  of  his  successor,  former  OMB  Director  Jack  Lew,  will  lead  to  a  transition  period  likely  marked  by  less  activity  as  the  new  Secretary  gets  comfortable  with  the  myriad  of  issues  confronting  the  Treasury  Department.      Additionally,  the  President  has  named  a  new  head  of  the  Securities  and  Exchange  Commission  (SEC),  Mary  Jo  White,  who  brings  a  background  as  a  federal  prosecutor  to  the  role  of  leading  the  agency  with  significant  responsibility  for  implementing  the  historic  sweeping  Dodd-­‐Frank  law.  This  appointment  may  signal  a  shift  to  an  emphasis  on  enforcement  at  the  same  time  the  agency  is  overwhelmed  both  from  a  personnel  and  financial  standpoint  with  the  burdens  of  implementing  Dodd-­‐Frank.    CONGRESS  The  go-­‐slow  approach  of  the  Senate  and  the  activist  focus  of  the  House  of  Representatives  likely  will  continue.  Senate  Banking  Committee  Chairman  Tim  Johnson  (D-­‐SD)  is  joined  by  a  new  ranking  Republican  Senator  Mike  Crapo  (R-­‐ID).  The  Senate  Banking  Committee  is  expected  to  become  a  much  tougher  investigative  panel  given  the  new  members  of  the  committee,  which  include  Senator  Elizabeth  Warren  (D-­‐MA).  Senator  Crapo  is  known  for  his  deliberative  style  that  

Darcy Kohn � 2/15/13 11:23 AMComment [9]: Is it a zero or low policy?

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will  emphasize  oversight  to  understand  the  effects  of  the  hundreds  of  regulations  being  imposed  on  the  financial  services  sector.    Just  the  opposite  can  be  expected  from  the  House  Financial  Services  Committee  where  the  new  Chairman  of  the  House  Financial  Services  Committee  is  Jeb  Hensarling  (R-­‐TX)  and  the  new  ranking  Democratic  member  is  Representative  Maxine  Waters  (D-­‐CA).  Chairman  Hensarling,  an  outspoken  free  market  advocate,  will  oversee  not  only  aggressive  oversight  of  bank  and  financial  regulators  ,  but  will  also  push  legislative  ideas  to  reform  government  housing  support  and  address  problems  exposed  by  the  implementation  of  Dodd-­‐Frank.  Representative  Waters  is  well  known  for  her  advocacy  for  the  inclusion  of  minorities  and  women  in  the  financial  services  industry,  but  has  made  a  concerted  effort  to  broaden  her  reach  to  the  financial  services  industry.  Her  evolving  role  and  her  relationship  with  Chairman  Hensarling  will  be  interesting  to  observe  for  clues  as  to  whether  the  Financial  Services  Committee  can  actually  become  more  bipartisan  with  a  free  market  conservative  Chairman  setting  the  agenda.      There  are  three  issues  likely  to  dominate  the  Congressional  agenda  in  2013:  the  continuing  implementation  of  Dodd-­‐Frank,  reforming  government  support  of  housing,  and  responding  to  the  Consumer  Financial  Protection  Bureau  (CFPB).    Dodd-­‐Frank  Repeal  of  Dodd  Frank  will  not  occur,  but  change  is  certain.  Implementation  grinds  on  with  only  35  percent  of  the  nearly  400  mandated  rulemakings  completed  as  final  rules.  This  is  complex  and  arcane  work  that  has  engulfed  the  regulators  at  the  SEC  and  the  Treasury  Department.  Haste  to  enact  the  rules  has  led  to  mistakes  which  have  been  successfully  challenged  in  the  federal  courts.  The  demand  for  change  will  increase  exponentially  going  forward  as  implementation  shows  both  the  ineffectiveness  and  unintended  consequences  of  final  rules  once  they  are  issued.  Congressional  oversight  of  the  interaction  and  compliance  burdens  of  the  regulations  inevitably  will  lead  to  more  legislative  proposals  to  address  problems  discovered  with  Dodd-­‐Frank.    Government  Sponsored  Enterprises  (GSEs)  Chairman  Hensarling  has  been  an  outspoken  proponent  of  abolishing  the  government  sponsored  enterprises  (GSEs)  Fannie  Mae  and  Freddie  Mac,  but  addressing  the  insolvency  of  the  Federal  Housing  Administration  (FHA)  will  be  a  first  priority.  FHA  has  at  least  a  $16  billion  shortfall  as  its  share  of  mortgage  originations  increased  six-­‐fold  since  2009  in  response  to  private  lenders  leaving  the  market  during  the  great  recession.  FHA  recapitalization  likely  will  occur  only  after  Congress  reexamines  the  mission  of  the  agency  and  reduces  its  scope  of  operation  to  avoid  future  taxpayer  losses.      There  is  broad  support  among  House  Republicans  on  the  Financial  Services  Committee  to  replace  the  GSEs  with  a  fully  privatized  mortgage  finance  system.  There  is  no  interest  by  the  Democratic  controlled  Senate  Banking  Committee  in  eliminating  the  GSEs.  The  fact  the  GSEs  survived  Dodd-­‐Frank  without  change,  the  dramatic  shift  of  their  financial  position  to  a  more  positive  basis,  and  general  nervousness  over  any  potential  disruption  to  the  slowly  recovering  housing  market  are  all  points  arguing  against  significant  change  to  the  GSEs.  

Darcy Kohn � 2/15/13 11:25 AMDeleted:  

Darcy Kohn � 2/15/13 11:25 AMDeleted:  since  being  named  the  senior  Democrat  on  the  committee  following  the  retirement  of  former  Representative  Barney  Frank

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Darcy Kohn � 2/15/13 11:26 AMDeleted: Securities  and  Exchange  Commission

Darcy Kohn � 2/15/13 11:26 AMDeleted: (SEC)  

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 Consumer  Financial  Protection  Bureau  (CFPB)  The  roll  out  of  the  Consumer  Financial  Protection  Bureau  (CFPB),  nurtured  by  then  consumer  advocate  and  now  Senator  Elizabeth  Warren,  will  result  in  much  legislative  activity.  The  CFPB  with  its  vast  funding  and  strong  support  from  the  President  will  undertake  a  bold  agenda  certain  to  create  legislative  demands  as  a  backlash.  The  CFPB  is  funded  by  the  Federal  Reserve  and,  as  a  result,  is  not  subject  to  the  Congressional  appropriations  process  and  its  oversight.  Republicans  will  continue  to  demand  the  CFPB  convert  to  a  five  member  board,  rather  than  the  single  administrator,  and  be  subject  to  the  Congressional  appropriations  process.  The  CFPB  has  a  large  budget  and  a  broad  scope  of  potential  consumer  finance  jurisdiction  including  mortgages,  private  education  lenders,  pay  day  lenders,  debt  consolidation  and  collection  activities,  credit  reporting  agencies,  consumer  credit  providers  and  prepaid  payment  cards.  How  the  conservative  House  and  the  liberal  Senate  address  the  actions  of  the  CFPB  will  be  of  substantial  interest  during  the  second  term  of  the  President.        

Health Care Affordable  Care  Act    The  Supreme  Court  decision  on  the  constitutionality  of  the  Affordable  Care  Act  (Department  of  Health  and  Human  Services,  et.  al.  v.  Florida,  et.  al.),  certainly  paved  the  way  for  the  law’s  full  implementation.  While  the  Court’s  decision  did  alter  the  provisions  of  the  Affordable  Care  Act  that  expanded  the  Medicaid  program,  essentially  making  it  a  state  option  as  to  whether  to  expand  Medicaid  coverage  in  the  state,  the  decision  ultimately  allowed  the  Administration  to  continue  its  course  of  implementing  the  law.  The  continued  implementation  ensures  that  health  insurance  exchanges  are  up  and  running  by  2014.  The  Administration  will  not  see  a  turnover  of  the  key  personnel  at  the  Department  of  Health  and  Human  Services  and  the  Centers  for  Medicare  and  Medicaid  Services  (CMS),  where  much  of  the  law’s  implementing  regulations  will  be  developed.  The  Administration  is  also  beginning  efforts  designed  to  educate  the  public  about  the  health  insurance  exchanges  so  that  there  will  be  a  smooth  transition  to  the  new  system  next  year.      Congressional  efforts  to  repeal  the  Affordable  Care  Act  in  its  entirety  are  not  likely  to  be  advanced  given  the  political  realities  following  the  November  elections.  However,  House  Republicans  have  signaled  they  will  pursue  an  aggressive  oversight  agenda  on  the  law’s  implementation.  The  House  Energy  and  Commerce  Committee  appointed    psychologist  Dr.  Tim  Murphy  (R-­‐PA)  as  Chair,  and  physician  Dr.  Michael  Burgess  (R-­‐TX)  as  Vice  Chair,    to  lead  the  Oversight  Subcommittee,  indicating  that  an  emphasis  will  be  placed  on  health  oversight  issues.  Similarly,  the  House  Ways  and  Means  Committee  Oversight  Subcommittee  is  also  chaired  by  a  physician  –  Dr.  Charles  Boustany  (R-­‐LA)  –  suggesting  this  committee  will  also  closely  examine  the  implementation  of  the  Affordable  Care  Act.      Medicare  SGR  Congress  may  finally  address  the  need  to  permanently  fix  the  Medicare  Sustainable  Growth  Rate  (SGR)  formula,  which  is  used  to  reimburse  physicians  for  Medicare  services.  The  SGR  was  

Darcy Kohn � 2/15/13 11:27 AMComment [10]: Note new announcement of confirming a Director? Possibility for first Senate confirmation since 2009?

Darcy Kohn � 2/15/13 11:29 AMDeleted: a  physician  and  a  psychologist,

Darcy Kohn � 2/15/13 11:27 AMDeleted: and  Dr.  Tim  Murphy  (R-­‐PA),  respectively,

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put  in  place  by  the  Balanced  Budget  Act  of  1997  in  an  attempt  to  control  Medicare  costs,  but  turned  problematic  when  it  began  projecting  payment  reductions.  Congress  has  routinely  acted  to  negate  these  scheduled  reductions  in  payments  to  physicians.  Although  there  has  always  been  strong  desire  in  Congress  to  permanently  fix  the  formula,  the  high  cost  of  doing  so  proved  to  be  an  obstacle.  An  updated  cost  estimate  released  February  5,  by  the  CBO,  showed  that  a  freeze  on  physician  payments  would  cost  $138  billion  over  a  ten  year  period,  down  from  previous  estimates  of  more  than  $300  billion  only  months  earlier,  giving  new  momentum  to  the  issue.  There  are  efforts  already  underway  by  the  Congressional  committees  of  jurisdiction  to  prevent  any  future  reductions  in  payment  under  the  Medicare  SGR  formula  and  to  develop  an  alternative  fee-­‐for-­‐service  payment  system.  Proposals  currently  being  circulated  envision  a  payment  system  that  would  place  an  emphasis  on  quality  and  efficiency  of  care.      Medicaid  There  may  not  be  much  legislative  action  on  Medicaid  this  year,  but  the  program  will  continue  to  draw  considerable  attention.  Provisions  in  the  Affordable  Care  Act  that  allow  states  to  expand  their  Medicaid  programs  to  cover  individuals  up  to  133  percent  of  the  federal  poverty  level  are  due  to  take  effect  in  2014,  which  means  states  must  decide  whether  to  participate.  So  far,  21  states  and  the  District  of  Columbia  have  opted  to  expand  their  programs.  Medicaid  expansion  is  of  particular  interest  to  hospitals  concerned  about  reductions  in  Medicaid  Disproportionate  Share  Hospital  (DSH)  payments  under  the  health  care  law,  as  well  as  businesses  concerned  about  covering  health  care  costs  for  their  low-­‐wage  workers.  Lobbying  on  this  issue  at  the  state  level  will  continue  to  intensify.      Medicaid  is  exempt  from  pending  cuts  under  the  budget  sequestration,  but  still  remains  vulnerable  as  Congress  looks  for  ways  to  reform  entitlements,  reduce  spending,  and  pay  for  other  health  care  priorities,  such  as  fixing  the  Medicare  SGR  formula.  In  the  last  Congress,  options  to  reduced  Medicaid  spending  included  reducing  Medicaid  provider  taxes  and  extending  the  Medicaid  DSH  reductions  passed  in  the  Affordable  Care  Act.  Both  of  these  options  remain  on  the  table.    

Homeland Security and Cybersecurity HOMELAND  SECURITY  Senate  This  year  the  Department  of  Homeland  Security  (DHS)  will  mark  its  10th  anniversary.  Throughout  the  past  ten  years,  Senator  Joe  Lieberman  (I-­‐CT)  and  Senator  Susan  Collins  (R-­‐ME)  led  the  Senate  Homeland  Security  and  Governmental  Affairs  Committee  (SHSGA),  the  primary  Senate  committee  of  jurisdiction  for  DHS.    Homeland  issues  were  a  principal  focus  for  Senators  Lieberman  and  Collins,  and  the  two  worked  closely  on  oversight  of  the  Department.  Leadership  of  SHSGA  has  now  moved  to  Chairman  Tom  Carper  (D-­‐DE)  and  Ranking  Republican  Tom  Coburn  (R-­‐OK).  While  both  Senators  have  worked  on  homeland  issues,  they  have  focused  most  of  their  committee  efforts  on  the  inner  workings  of  government  agencies  generally.  Senator  Coburn  has  been  a  strong  advocate  

Darcy Kohn � 2/15/13 11:30 AMDeleted: Congressional  Budget  Office  (

Darcy Kohn � 2/15/13 11:30 AMDeleted: )

Darcy Kohn � 2/15/13 11:30 AMComment [11]: Check this? Ohio recently announced.

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of  reducing  the  size  of  the  federal  bureaucracy,  and  issued  a  report  critical  of  DHS’s  work  with  state  and  local  grants,  as  well  as  the  use  of  fusion  centers  for  information  collection  and  analysis.  Senators  Carper  and  Coburn  share  a  cordial  relationship,  but  it  remains  to  be  seen  whether  they  will  develop  the  same  level  of  cooperation  and  interest  in  promoting  homeland  issues  as  their  predecessors.    Chairman  Carper  has  already  indicated  that  cybersecurity  will  be  a  primary  agenda  item  for  the  committee.  He  was  a  co-­‐sponsor  of  the  Lieberman-­‐Collins  cyber  bill  in  the  last  Congress.  This  year,  he  has  already  joined  Senator  Jay  Rockefeller  (D-­‐WV)  and  others  in  offering  a  cybersecurity  bill  (S.  21),  and  has  said  he  will  work  closely  with  his  Senate  colleagues,  affected  industries  and  outside  interests  to  consider  changes  to  the  bill  that  will  enhance  the  possibility  of  passage.      In  addition  to  cybersecurity,  other  items  on  Chairman  Carper’s  homeland  agenda  include  border  security,  public  safety  communications,  Federal  Emergency  Management  Agency  (FEMA)  oversight,  and  passage  of  a  DHS  Authorization  bill.  Both  Senators  Carper  and  Coburn  will  focus  on  DHS  management,  including  ways  to  reduce  spending  and  limit  waste.    House    The  House  Homeland  Security  Committee  will  also  see  a  shift  in  leadership  as  Rep.  Michael  McCaul  (R-­‐TX)  replaces  Rep.  Peter  King  (R-­‐NY)  as  Chairman.  Rep.  Bennie  Thompson  (D-­‐MS)  will  remain  as  Ranking  Member.  There  will  be  several  new  members  on  the  committee,  most  of  whom  will  not  have  the  “in  at  the  beginning”  relationship  with  DHS  that  outgoing  Members  had,  and  may  be  more  critical  generally  of  its  operations  and  performance.  While  we  do  not  expect  any  efforts  to  “undo”  DHS,  there  continue  to  be  concern  expressed  regarding  the  Department’s  track  record.    Chairman  McCaul  has  met  with  Secretary  Napolitano  to  discuss  the  Department,  and  he  has  released  an  extensive  agenda  for  his  committee.  Like  his  Senate  counterparts,  McCaul  stressed  the  urgency  of  acting  on  cyber  legislation  (he  is  Co-­‐Chairman  of  the  Congressional  Cybersecurity  Caucus).  He  will  also  focus  on  border  security,  DHS  management  (he  has  offered  legislation  to  improve  the  DHS  management  process),  chemical  security  (CFATS),  first  responders,  terrorism,  TSA  (more  privatization)  and  passing  a  DHS  authorization.      Both  House  and  Senate  committees  will  also  be  active  in  the  immigration  debate.  Though  this  is  primarily  a  Judiciary  Committee  domain,  Homeland  jurisdiction  derives  from  the  role  of  DHS  in  immigration  services,  border  security,  enforcement  and  programs  such  as  E-­‐Verify.      House  and  Senate  Appropriators  will  also  review  DHS  spending  and  program  performance.    Representative  John  Carter  (R-­‐TX)  will  assume  Chairmanship  of  the  House  DHS  Appropriations  Subcommittee  and  has  particular  interest  in  border  security,  immigration,  transportation  security  and  FEMA.    CYBERSECURITY    

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Despite  wide-­‐spread,  bipartisan  agreement  on  Capitol  Hill  and  in  the  Administration  that  our  vulnerability  to  cyber  attacks,  crime,  theft,  and  economic  disruption  must  be  addressed,  Congress  was  unable  to  agree  on  a  legislative  solution  in  the  112th  Congress  and  the  issue  has  resurfaced  as  a  high  profile  agenda  item  for  this  Congress.      Last  Congress  Numerous  bills  were  introduced  in  the  last  Congress.  In  the  Senate,  a  comprehensive  bill  (S.  3414)  introduced  by  Senators  Lieberman  and  Susan  Collins  would  have  provided  a  new  regulatory  framework  and  organizational  changes  along  with  incentives  for  improving  private-­‐sector  security.  An  alternative  measure  (S.  3342)  was  introduced  by  Senators  John  McCain  and  Kay  Bailey  Hutchison  (R-­‐TX)  with  less  regulatory  authority  and  more  focus  on  cybercrime  provisions.  Neither  bill  passed  the  Senate.  While  comprehensive  bills  were  introduced  in  the  House  as  well,  the  House  Leadership  took  a  more  piecemeal  approach  to  cyber  reform,  and  passed  several  bills  dealing  with  information  sharing  and  R&D  and  the  development  of  technical  standards.  The  most  notable  of  these  was  a  bill  (H.R.  3523)  offered  by  Representatives  Mike  Rogers  (R-­‐MI)  and  Dutch  Ruppersberger  (D-­‐MD)  to  promote  information-­‐sharing  between  the  government  and  businesses  that  own  critical  infrastructure.  None  of  the  House  measures  were  taken  up  in  the  Senate.    One  reference  to  cyber  was  included  in  the  Defense  Authorization  bill,  which  was  passed.  That  provision  directs  DOD  to  establish  a  process  for  defense  contractors  with  classified  information  to  report  cyber  attacks  to  DOD.    Administration  Position  Citing  an  increase  in  cyber  activity  and  the  lack  of  congressional  action,  President  Obama  issued  a  cybersecurity  Executive  Order  on  February  12,  directing  relevant  federal  agencies  to  develop  voluntary  security  standards  for  critical  infrastructure  companies,  expand  government  sharing  of  classified  threat  data  with  the  private  sector,  and  consider  additional  regulations  where  appropriate.  Both  Congress  and  the  Administration  agree  that  legislation  is  still  necessary  since  there  are  important  issues  such  as  liability,  civil  penalties,  etc.,  that  cannot  be  done  through  an  Executive  Order.  Congressional  committee  leaders  have  suggested  they  will  review  the  President’s  Executive  Order  as  part  of  their  legislative  process.    113th  Congress  House  and  Senate  committee  leaders  on  both  sides  of  the  aisle  have  indicated  that  cybersecurity  will  be  a  priority  this  year.  Representatives  Rogers  and  Ruppersberger  have  reintroduced  their  information-­‐sharing  legislation.  Senate  Commerce  Chairman  Rockefeller,  Senate  Homeland  Security  Chairman  Carper  and  others  have  already  introduced  S.  21,  a  “placeholder”  cyber  bill  which  will  be  fleshed  out  during  further  discussions  among  senators,  outside  groups,  stakeholders  and  other  affected  industries.  Some  of  the  more  controversial  issues  from  last  year’s  bills,  including  the  “standards”  language,  have  yet  to  be  decided.  Chairman  Carper  has  also  been  in  discussions  with  the  new  Chairman  of  the  House  Homeland  Committee,  Representative  McCaul,  who  has  also  emphasized  on  cybersecurity.  In  the  House,  primary  focus  will  be  in  the  Homeland  Security  and  Oversight  and  Government  Reform  Committees.  In  each  case,  several  other  committees,  including  Judiciary,  Intelligence,  Armed  Services  and  Commerce  will  also  be  active.  A  primary  concern  will  be  whether  to  move  a  more  

Darcy Kohn � 2/15/13 11:31 AMComment [12]: Is this necessary?

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comprehensive  measure,  or  to  move  quickly  on  less  controversial  aspects  in  a  piece-­‐meal  approach.    In  either  case,  Congress  will  have  to  address  the  major  concerns  that  arose  during  last  year’s  debate.  These  include:  the  impact  on  consumer  use,  costs,  innovation,  privacy  and  liability.  Some  critics  also  objected  to  giving  DHS  control,  and  suggested  that  the  constant  changes  in  technology  make  it  difficult  to  agree  on  setting  specific  technical  standards.  Since  many  of  these  issues  have  been  aired  at  length,  Congress  can  draw  on  existing  work  and  consider  modifications  that  could  enable  legislation  to  move  this  year.  However,  finding  the  time  between  all  the  “cliffs”  and  other  priority  issues  could  present  a  significant  challenge.    One  other  cyber-­‐related  issue  is  worth  noting.  Several  departments,  including  DOD  and  DHS  have  suggested  the  need  for  more  qualified  personnel  and  resources  to  deal  with  the  growing  cyber  threat.    While  there  will  continue  to  be  some  debate  about  “who  mans  the  tiller”  with  regard  to  some  cyber  programs,  it  appears  likely  that  this  is  one  area  where  spending  cuts  may  be  less  severe,  even  in  view  of  the  general  concern  that  IT  spending  overall  may  see  some  reduction.  

Immigration Policy  and  political  concerns  converge  to  make  immigration  reform  ripe  for  consideration  in  2013.  On  the  policy  front,  millions  of  undocumented  aliens  reside  in  the  United  States;  their  status  needs  to  be  addressed.  There  is  a  continuing  need  to  secure  America’s  borders  and  gain  control  over  who  enters,  and  stays,  in  this  country,  which  will  include  consideration  of  a  workable  e-­‐verify  system.  At  the  same  time,  the  country’s  employers  need  a  reliable  flow  of  temporary  workers,  as  well  as  seasonal,  agricultural  and  skilled  workers,  including  those  in  technology  fields.  The  status  of  children  of  undocumented  aliens  brought  to  this  country  by  their  parents  has  also  become  part  of  the  policy  debate.    

These  are  the  potential  components  of  a  comprehensive  immigration  reform  package,  and  long-­‐time  advocates  for  such  a  package,  especially  one  providing  a  pathway  to  citizenship  for  undocumented  aliens,  are  pressing  for  action.  The  last  comprehensive  immigration  reforms  date  to  the  1980s  and  1990s.  There  is  a  broad  consensus  that  the  nation’s  immigration  system  is  broken  and  badly  in  need  of  repair.    

 

Added  to  the  mix  of  policy  issues  that  need  to  be  addressed  on  their  merits  are  political  considerations.  President  Obama’s  2008  campaign  promise  to  address  immigration  reform  in  his  first  term  went  unfulfilled,  as  economic  and  budget  issues,  together  with  a  major  health  care  overhaul,  dominated  the  domestic  agenda.  With  very  strong  support  from  Latino  voters  in  2012,  the  President  has  again  made  immigration  reform  a  major  priority.  Republicans  are  aware  that  their  last  two  Presidential  candidates  have  done  poorly  among  Latino  voters.  There  is  a  greater  understanding  among  Republicans,  now  more  than  ever,  that  they  must  do  better  

Darcy Kohn � 2/15/13 11:31 AMDeleted: noted  

Darcy Kohn � 2/15/13 11:32 AMDeleted: the  First  Session  of  the  113th  Congress

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among  Latino  voters  and  that  immigration,  the  way  it  is  discussed  and  substantively  addressed,  is,  at  a  minimum,  a  gateway  to  reaching  out  to  those  voters.    The  convergence  of  policy  and  political  concerns  that  has  pushed  immigration  reform  to  the  top  of  the  Congressional  and  Presidential  agendas,  however,  is  not  matched  by  as  broad  a  consensus  in  how  to  address  the  issue.  There  is  greater  support  for  comprehensive  immigration  reform  among  Congressional  Democrats  than  among  their  Republican  counterparts.  In  the  House  of  Representatives,  there  has  been  strong  Republican  support  for  some  parts  of  the  immigration  reform  agenda,  such  as  meeting  the  increased  need  for  high-­‐technology  workers.  A  majority  of  House  Republicans,  however,  have  not,  in  the  past,  favored  a  comprehensive  approach.  Many  House  Republicans  are  skeptical  of  granting  a  pathway  to  citizenship  for  undocumented  aliens  and  are  focused  on  border  enforcement  and  finding  a  workable,  mandatory  e-­‐verify  system  that  can  accommodate  agricultural  employers.  In  the  Senate,  there  are  some  Republicans  who  favor  comprehensive  immigration  reform;  others  are  more  aligned  with  the  House  Republican  approach.    On  January  28,  a  bipartisan  group  of  Senators  announced  agreement  in  principle  on  a  comprehensive  immigration  package,  in  a  five  page  document,  with  the  difficult  tasks  of  adding  the  details  and  crafting  actual  legislative  language  still  to  follow.  These  principles,  as  expressed  by  Senators  Charles  Schumer  (D-­‐NY),  John  McCain,  Dick  Durbin  (D-­‐IL),  Lindsay  Graham  (R-­‐SC),  Bob  Menendez  (D-­‐NJ),  Marco  Rubio  (R-­‐FL),  Michael  Bennet  (D-­‐CO),  and  Jeff  Flake  (R-­‐AZ),  broadly  speaking  include:      

1.  A  path  to  citizenship  for  unauthorized  immigrants  already  in  the  country,  contingent  on  securing  the  border  and  combating  visa  overstays;  

2. Improving  the  legal  immigration  system  and  attracting  the  world’s  best  and  brightest;  

3. Employment  verification;  and  

4. Admitting  new  workers  and  protecting  worker’s  rights.  

President  Obama  announced  his  plan  for  immigration  reform  the  next  day.  His  basic  plan  calls  for  strengthening  border  security;  cracking  down  on  employers  knowingly  hiring  undocumented  workers;  earned  citizenship  for  undocumented  immigrants  now  currently  in  the  country;  and  streamlining  legal  immigration,  with  a  focus  on  the  best  and  the  brightest  and  family  reunification;  and  streamlining  visa  and  foreign  visitor  processing.  The  President  said  that  if  Congress  does  not  act  in  a  timely  way,  he  will  submit  legislation  to  Congress  reflecting  his  approach.    Hearings  in  the  House  Judiciary  Committee  got  underway  on  February  5,  2013.  Senate  hearings  began  in  the  Judiciary  Committee  on  February  13,  with  a  plan  for  legislation  to  be  introduced  by  the  group  of  eight  Senators  no  later  than  March.  A  bipartisan  group  in  the  House  may  soon  announce  either  its  own  set  of  principles  on  which  they  will  later  introduce  legislation  or  actual  legislation.  A  path  to  legal  status  will  be  a  tougher  “sell”  in  the  House.  A  number  of  House  Republicans  are  talking  of  a  “middle  ground”  which  might  include  legalization  of  undocumented  

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aliens  but  not  a  pathway  to  citizenship  for  them.  As  well,  some  House  Republicans  prefer  a  piecemeal  approach  to  immigration  reform,  embodied  in  several  bills,  not  one  comprehensive  bill.  Traditional  advocates  for  immigration  reform  do  not  find  this  middle  ground  acceptable  on  substance,  nor  the  piecemeal  approach  viable  as  a  matter  of  process. Whether  the  Senate  and  the  House  will  be  able  to  agree  on  a  bill  to  be  presented  to  the  President  remains  to  be  seen;  the  effort  to  reach  such  agreement  will  play  out  at  least  through  the  spring  and  summer.  

International Affairs The  Senate  Foreign  Relations  and  House  Foreign  Affairs  Committees  have  undergone  a  sea  change  of  leadership,  with  a  set  of  all-­‐new  Chairmen  and  Ranking  Members.  Senator  John  Kerry’s  (D-­‐MA)  ascension  to  Secretary  of  State  and  Senator  Richard  Lugar’s  (R-­‐IN)  primary  election  defeat  have  resulted  in  the  rise  of  Senators  Menendez  and  Bob  Corker  (R-­‐TN)  to  be  Chairman  and  Ranking  Member,  respectively.  In  the  House,  term  limits  and  a  primary  defeat  resulted  in  Representatives  Ed  Royce  (R-­‐CA)  and  Elliot  Engel  (D-­‐NY)  replacing  Chairwoman  Ileana  Ros-­‐Lehtinen  (R-­‐FL)  and  ranking  member  Howard  Berman  (D-­‐CA),  respectively.  These  changes  will  have  major  repercussions.    In  both  cases,  the  chances  of  bipartisan  cooperation  and,  as  a  result,  greater  productivity,  increase  exponentially.  Furthermore,  while  more  modest  due  to  institutional  constraints,  there  are  also  real  opportunities  for  bicameral  cooperation  between  the  committees.  For  example,  the  shared  background  and  interests  of  Representatives  Royce  and  Corker  in  international  financial  and  economic  issues  may  spawn  cooperative  efforts  and  will  certainly  drive  their  respective  agendas.    Representative  Royce  has  made  no  secret  of  his  interest  in  promoting  free  trade  and  competitiveness  and  his  committee’s  role  in  authorizing  Overseas  Private  Investment  Corporation  (OPIC)  and  the  Trade  and  Development  Agency.  In  addition,  he  will  promote  energy  security  and  intellectual  property  protection.  He  also  intends  to  conduct  more  active  oversight  of  the  State  Department,  USAID,  the  Broadcasting  Board  of  Governors  and  other  agencies/entities  under  the  committee’s  jurisdiction.    Senator  Menendez  is  likely  to  cooperate  with  Senator  Corker  in  much  the  same  way  former  Senators  Kerry  and  Lugar  worked  together  on  many  issues.  Senator  Menendez  supports  Cuba  economic  sanctions  and  he  will  be  pitted  against  freshman  Senator  Jeff  Flake  (R-­‐AZ)  who  has  made  a  name  for  himself  in  the  House  opposing  Cuba  sanctions.  Senator  John  McCain  is  also  new  to  the  committee  and  his  overall  seniority  and  stature  will  make  him  a  player  as  he  has  already  demonstrated  in  hearings  with  Secretary  Clinton  on  Benghazi  and  with  John  Kerry’s  confirmation.    Both  committees  will  be  consumed  with  complex  country  issues  including  Iran,  Syria,  North  Korea,  and  the  rise  of  al-­‐Qaeda  splinter  groups  in  Mali  and  North  Africa.  Russia,  China,  and  Venezuela  will  also  receive  attention.  Also  expect  to  see  a  Foreign  Relations  Authorization  Act  

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considered  in  both  chambers  this  year  which  will,  no  doubt,  address  the  issues  that  led  to  the  Benghazi  murders,  among  many  other  things.  

Judiciary Gun  control    With  the  strong  backing  of  the  Obama  Administration,  Congress  is  expected  to  consider  legislation  that  reinstates  the  “assault  weapon”  ban  that  was  enacted  in  the  1990s  and  expired  during  George  W.  Bush’s  Presidency,  affecting  semi-­‐automatic  weapons  with  certain  features,  including  militaristic  appearance.  The  President  has  also  called  for  universal  background  checks  for  anyone  seeking  to  buy  a  firearm,  closing  existing  exceptions  to  the  background  check  requirement.  Congress  will  also  debate  a  limit  on  the  size  of  ammunition  clips.  President  Obama  and  other  gun  control  advocates  have  called  for  a  10-­‐round  limit.  Congress  may  also  legislate  to  require  better  record  keeping  to  enhance  the  effectiveness  of  background  checks  and  better  track  guns,  as  well  as  to  make  changes  to  federal  mental  health  programs.      Intellectual  property  The  Judiciary  Committees  in  both  Houses  can  be  expected  to  undertake  oversight  on  implementation  of  the  America  Invents  Act,  which  overhauled  the  nation’s  patent  laws.  Oversight  hearings  might  also  be  had  on  the  use  of  standard  essential  patents,  an  issue  with  both  intellectual  property  and  competition  components.  Piracy  on  the  internet  will  remain  an  oversight  focus  of  both  Committees  as  they  grapple  with  the  desire  to  protect  copyrighted  material  on  the  internet  without  interfering  with  the  legitimate  operation  of  internet.  After  the  uproar  in  the  last  Congress  over  the  SOPA/PIPA  bills,  Congress  will  tread  carefully  here,  likely  looking  first  for  areas  of  clear  consensus.      Privacy  The  Judiciary  Committees  are  likely  to  address  various  privacy  issues  in  the  113th  Congress,  such  as  data  breach  legislation;  location  data  protection;  review  and  possible  amendment  of  the  Electronic  Communications  Privacy  Act  (ECPA);  and  Committee  members  will  play  a  role  in  the  cyber  security  issue.  Both  Committees  are  likely  to  examine  the  computer  fraud  and  abuse  provisions  of  Federal  law.    Competition  The  two  Judiciary  Committees  can  be  expected  to  continue  their  oversight  role  on  general  competition  issues.  This  will  include  issues  affecting  the  internet,  as  well  as  oversight  of  the  activities  of  the  Justice  Department’s  Antitrust  Division.  The  House  Judiciary  Committee  will  likely  renew  its  consideration  of  a  bill  introduced  in  the  112th  Congress,  the  “Business  Activity  Tax  Simplification  Act,”  which  clarifies  the  nature  of  the  nexus  a  business  outside  of  a  state  must  have  for  the  state  to  tax  it.  The  Committee  is  also  likely  to  consider  legislation  addressing  marketplace  equity  authorizing  states  to  require  remote  sellers  to  collect  and  remit  sales  and  use  taxes  on  sales  into  the  state.      

Darcy Kohn � 2/15/13 11:34 AMComment [13]: This section seems a little thin given its huge profile. Mention Biden’s task force?

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Under  the  leadership  of  Senate  Judiciary  Committee  Chairman  Patrick  Leahy  (D-­‐VT),  the  Senate  passed  a  renewal  of  the  “Violence  Against  Women  Act”  (S.  47)  by  a  vote  of  78-­‐22.  

Labor With  recent  decisions  in  Michigan  and  Indiana  enacting  “right-­‐to-­‐work”  laws,  a  series  of  blows  have  been  dealt  to  organized  labor  in  states  that  were  once  at  the  heart  of  the  labor  movement.  Though  these  decisions  were  made  at  the  state  level,  they  highlight  an  ongoing  movement  against  unionization.  It  is  through  this  prism  that  we  assess  the  implications  of  the  Presidential  and  Congressional  elections  of  2012  and  the  outlook  for  2013  for  organized  labor  and  the  future  role  of  the  National  Labor  Relations  Board  (NLRB),  the  tenuous  situation  with  Obama’s  recess  appointments,  wage  and  hour  issues,  Employee  Free  Choice,  and  Title  VII.    NLRB  Appointments  In  January  2012,  the  President  made  three  "recess  appointments”  -­‐  Sharon  Block,  Terence  Flynn,  and  Richard  Griffin  to  serve  as  Members  of  the  NLRB.  The  court’s  ruling  sides  with  Republican  lawmakers  and  a  canning  company  that  challenged  the  appointments  and  the  decision  could  reshape  a  long-­‐standing  practice  by  U.S.  presidents  to  make  recess  appointments.On  January  25,  2013,  the  U.S.  Court  of  Appeals  for  the  District  of  Columbia  Circuit  ruled  that  President  Obama's  January  2012  recess  appointment  of  three  members  to  the  five-­‐member  National  Labor  Relations  Board  (NLRB)  was  unconstitutional.  Though  such  appointments  have  been  used  by  presidents  for  decades,  in  this  particular  case,  President  Obama’s  actions  were  unprecedented  because  the  Senate  was  in  “pro-­‐forma  session”  –  when  Congress  is  briefly  in  and  out  of  session,  sometimes  only  lasting  a  few  minutes.    

The  January  25  decision,  if  it  holds,  would  restrain  the  President’s  power  to  make  such  decisions  in  the  future  and  calls  into  question  the  validity  of  more  than  200  disputes  the  NLRB  has  ruled  on  over  the  past  year  and  an  additional  100  cases  that  are  pending  review  because  the  Board  lacked  a  quorum.  These  disputes  cover  a  wide  range  of  topics  including  when  employees  can  form  a  union  to  whether  employers  can  fire  employees  because  of  comments  they  post  on  social  media  about  their  working  conditions.  The  decision  also  puts  in  jeopardy  recent  moves  by  the  Consumer  Financial  Protection  Bureau  (CFPB),  since  its  director,  Richard  Cordray,  was  also  installed  via  a  recess  appointment.  That  said,  we  believe  Cordray’s  appointment  will  remain  firm.  

Ultimately,  the  long  term  impact  of  the  ruling  will  depend  on  what  the  Obama  Administration  does  next.  If  the  Administration  appeals  the  decision  to  the  full  D.C.  Circuit  Court  and  the  Supreme  Court,  the  rulings  would  determine  the  validity  of  all  board  decisions  since  Obama  made  his  appointments  and  the  validity  of  the  board  members  themselves.  If  no  appeal  is  made,  every  NLRB  ruling  since  January  2012  would  be  invalidated.  

While  the  NLRB  has  said  that  it  plans  to  move  forward  with  business  as  usual,  issuing  decisions  in  labor  disputes  as  though  nothing  has  changed,  the  decision  raises  major  questions  and  such  uncertainty  creates  confusion  in  the  short  term  for  banks,  financial  markets  and  the  mortgage  

Darcy Kohn � 2/15/13 11:34 AMComment [14]: Is there potential for House consideration? Feel like Boehner has mentioned it?

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industry.  Whatever  the  outcome,  the  NLRB  will  continue  to  represent  organized  labor’s  most  preferred  and  sympathetic  venue  for  consideration  of  their  agenda.  No  matter  the  outcome  of  the  case,  the  Obama  Administration  will  continue  to  try  and  stock  the  Board  with  appointees  sympathetic  to  labor  organizations.  

While  Democrats  have  stayed  largely  silent  on  the  issue,  House  and  Senate  Republicans  on  the  committees  of  jurisdiction  -­‐  the  House  Education  and  the  Workforce  Committee  and  the  Senate  HELP  Committee  -­‐  have  loudly  supported  the  D.C  Circuit  court  decision,  calling  on  the  NLRB  to  cease  all  activity  until  “qualified’  nominees  have  been  constitutionally  appointed  to  the  board.  From  their  perspective,  any  attempt  to  continue  the  battle  in  federal  court  prolongs  the  uncertainty  the  action  has  created  for  America’s  workers  and  job  creators.  Hearings  will  begin  in  the  House  mid-­‐February  to  assess  the  future  of  the  Board  and  what  it  means  for  business  and  labor  alike.    Wage  and  Hour  Issues    In  President  Obama's  second  term,  we  expect  to  see  even  more  vigorous  enforcement  of  the  wage  and  hour  laws.  Wage  and  hour  law  is  the  body  of  law  that  establishes  and  regulates  wage  standards,  including  minimum  wage  and  overtime.  This  year  the  Department  of  Labor  is  committed  to  an  aggressive  approach  with  employers  that  seek  to  maximize  recovery  of  backpay  and  other  monetary  remedies.  Also  expect  to  see  more  DOL  regulatory  initiatives  in  this  space.        During  his  2013  State  of  the  Union  Address,  the  President  called  for  Congress  to  increase  the  minimum  wage  to  $9.00  per  hour,  saying  that  a  “family  with  two  kids  that  earns  the  minimum  wage  still  lives  below  the  poverty  line.”  President  Obama  also  offered  his  support  for  tying  the  minimum  wage  to  the  cost  of  living.  Currently  set  at  $7.25  per  hour,  the  last  congressional  action  authorizing  an  increase  in  the  minimum  wage  was  signed  into  law  in  2009.  States  have  been  taking  the  issue  into  their  own  hands  with  nearly  half  having  increased  their  minimum  wage  this  year  or  considering  plans  to  raise  it.    Employee  Free  Choice  Act  (EFCA)  and  Major  Rules    The  general  consensus  is  that  the  Employee  Free  Choice  Act  (EFCA)  will  not  come  to  the  floor  in  the  113th  Congress.  However,  the  NLRB  will  seek  to  support  unionizing  efforts  through  the  rulemaking  and  regulatory  process.  A  number  of  important  rules  will  come  into  play  in  this  space  including:  NLRB’s  “Notice  Poster”  rule,  the  “Ambush  Election”  rule,  and  The  “Persuader  Rule”    These  rules,  which  could  have  significant  impacts  on  business,  have  all  been  subject  to  several  legal  challenges  and  the  final  word  on  these  cases  will  have  major  implications  as  to  how  far  the  NLRB  can  go  within  this  rulemaking  realm.    While  a  decision  on  the  Notice  Poster  rule  was  expected  at  the  end  of  January,  the  court  has  yet  to  rule  on  the  case  and  a  decision  is  not  expected  until  later  this  spring.  The  same  is  true  for  the  Ambush  Election  rule  and  we  do  not  expect  a  ruling  until  later  this  year.  The  Department  of  Labor’s  (DOL)  proposed  Persuader  rule  not  yet  out,  but  is  expected  in  late  April.  DOL’s  intent  to  drastically  change  the  accepted  definition  of  “advice,”  would  have  major  implications  for  business  as  it  would  require  

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consultants  to  disclose  any  advice  given  to  a  client  regarding  “collective  bargaining”  issues  to  the  Department  of  Labor.  This  is  a  concern  for  a  number  of  reasons,  not  the  least  of  which  is  protecting  the  proprietary  information  and  advice  that  a  consultant  provides.        Title  VII  and  Equal  Employment  Opportunity  Commission    With  President  Obama  remaining  in  power,  we  expect  that  there  will  be  a  move  to  add  sexual  orientation  as  a  protected  category  under  Title  VII  of  the  Civil  Rights  Act  of  1964.  The  Equal  Employment  Opportunity  Commission  (EEOC)  will  also  continue  to  strengthen  its  initiative  targeting  systemic  discrimination.  

Tax The  Fiscal  Cliff  Passage  of  the  “American  Taxpayer  Relief  Act”  (ATRA),  H.R.  8,  avoided  the  fiscal  cliff  in  early  January.  Given  the  recent  action  on  ATRA,  some  are  questioning  the  need  or  urgency  for  tax  reform  this  year,  or  even  in  the  113th  Congress.  It  is  true  the  next  few  months  will  be  filled  with  more  fiscal  and  budgetary  drama,  but  the  need  for  comprehensive  tax  reform  with  lower  rates  is  as  necessary  and  relevant  as  ever.  Significantly,  the  ATRA  inverted  who  pays  the  top  rates;  individuals  now  pay  the  highest  tax  rates  in  the  United  States.  Prior  to  the  ATRA,  corporations  and  individuals  shared  the  top  statutory  tax  rate  of  35  percent.  Small  businesses  and  multinational  corporations  will  continue  the  fight  for  a  lower  tax  rate.      Issues  that  add  to  the  economic  uncertainty  early  this  year  include  the  sequester  of  funds  from  the  federal  budget  for  deficit  reduction  scheduled  to  take  effect  on  March  1,  2013;  the  expiration  of  the  current  six-­‐month  funding  for  the  federal  government  which  expires  on  March  27,  2013;  and  the  ever  present  federal  debt  limit  which  will  need  to  be  increased  again  sometime  in  the  summer  of  2013.  Congress  will  have  to  address  these  issues  immediately.      Despite  this  immediate  fiscal  focus,  House  Ways  and  Means  Committee  Dave  Camp  (R-­‐MI)  has  indicated  publicly  and  privately  that  he  intends  to  bring  a  legislative  product  to  the  Committee  soon  –  even  as  early  as  this  summer.  Some  revenues  were  gained  by  the  increased  tax  rates  in  ATRA,  and  there  were  significant  cost  items  swept  away  as  well.  For  example,  the  tax  writing  committees  will  not  have  to  manage  the  $1.8  trillion  cost  of  fixing  the  alternative  minimum  tax  (AMT).  Tax  reform  may  produce  additional  revenues  by  eliminating  various  tax  deductions  and  credits  in  order  to  achieve  a  lower  corporate  tax  rate  –  now  the  highest  in  the  developed  world  along  with  Japan.        Tax  Reform  Recent  activities  that  signal  the  future  of  the  tax  reform  debate  include:    

• Chairman  Camp  of  the  House  Ways  and  Means  Committee  recently  released  a  discussion  draft  of  tax  changes  to  the  financial  services  industry.  Other  discussion  drafts  are  expected  early  this  year.  It  has  been  suggested  that  Chairman  Camp  may  want  to  hold  a  Committee  markup  as  soon  as  this  summer.    

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• The  President’s  2011  “framework”  for  tax  reform,  while  not  comprehensive,  was  a  signal  that  the  Administration  was  ready  to  engage  on  corporate  tax  reform.  In  his  State  of  the  Union  Address,  President  Obama  said,  “Now  is  our  best  chance  for  bipartisan,  comprehensive  tax  reform  that  encourages  job  creation  and  helps  bring  down  the  deficit.”  Incoming  Treasury  Secretary  Jack  Lew,  in  his  confirmation  hearing,  stated  that  the  Administration  supports  efforts  by  Congress  for  a  more  competitive  tax  system  and  “pledge[d]  to  work  with  the  Committee  to  get  it  done.”    A  key  element  will  be  whether  the  President  will  put  his  political  force  and  emphasis  behind  a  comprehensive  deal.        

• Chairman  Baucus  of  the  Senate  Finance  Committee  has  also  stated  his  support,  though  not  as  aggressively  as  Chairman  Camp,  for  comprehensive  tax  reform.  He  is  up  for  reelection  in  2014  and  he  will  take  great  care  to  be  responsive  to  the  many  small  businesses  in  Montana  over  the  next  two  years.    

   A  key  question  is  if  corporate  tax  reform  might  be  considered  before  overall  tax  reform.  This  is  possible  because  both  the  President’s  “Framework”  and  the  discussion  drafts  offered  by  Chairman  Camp  thus  far  address  the  corporate  side  of  the  tax  code.  However,  as  more  than  half  of  the  U.S.  economy  is  driven  by  S-­‐corporations  and  partnerships,  great  care  will  need  to  be  given  to  ensure  that  business  deductions  and  credits  that  are  eliminated  in  order  to  lower  the  corporate  tax  rate  do  not  disadvantage  of  pass-­‐through  taxpayers.  It  is  noted  that  the  two  Chairmen  have  stated  their  strong  desire  for  comprehensive  reform  and  not  individual  or  corporate  reform  as  stand-­‐alone  measures.  We  believe  that  they  will  keep  their  word  on  this  matter  and  will  incorporate  individual  tax  reform  into  a  comprehensive  package.      Comprehensive  tax  reform  could  be  a  key  component  of  an  overall  deficit  reduction  package.  We  anticipate  that  this  package  will  take  shape  this  year  and  could  include  the  various  issues  reviewed  here.  Several  tax  and  budget  legislative  opportunities  exist  in  the  new  Congress,  even  early  this  year.    

Technology Against  the  political  backdrop  of  President  Obama’s  reelection  and  numerous  changes  in  Congressional  Committee  membership,  Congress  faces  a  robust  agenda  of  technology-­‐related  issues,  many  of  which  were  discussed  at  length  in  the  112th  Congress,  but  with  no  legislative  results.  These  issues  fall  into  several  categories:  first,  the  “perennial  headliners”  such  as  cybersecurity,  privacy-­‐related  issues,  and  copyright  protection;  second,  the  “event-­‐related”  issues  such  as  media  violence  (part  of  the  gun  control  debate),  hi-­‐tech  visas  and  STEM  issues  (related  to  immigration),  emergency  communications  systems  (fallout  from  Hurricane  Sandy  and  other  disasters);  and  third,  a  growing  concern  that  communications  laws  written  in  the  “copper  wire,  cable  and  wireless  days”  may  no  longer  address  the  realities  of  today’s  IP-­‐based  network.  Also,  issues  regarding  federal  spending  on  IT  systems,  research,  and  the  need  for  more  “tech-­‐savvy”  government  workers  will  arise  during  the  budget  oversight  process.    Congressional  Committee  leaders  in  the  new  Congress  have  already  listed  some  of  these  issues  as  agenda  “priorities,”  and  are  undertaking  renewed  efforts  with  their  colleagues  and  outside  

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stakeholders  to  find  consensus.  In  some  cases,  success  may  depend  on  whether  members  pursue  a  “comprehensive”  approach  or  agree  to  a  “piece-­‐meal”  strategy  for  passing  smaller,  less  contentious  bills.  A  number  of  outside  activities  could  influence  Congressional  action.  For  example,  the  Federal  Communication  Commission  (FCC),  the  Federal  Trade  Commission  (FTC)  or  court  decisions  (on  net  neutrality  or  spectrum  auctions)  could  also  provoke  congressional  reaction.  Marketplace  and  business  activities  could  invite  hearings.  And  of  course,  another  incident  of  violence,  cyber  attack,  or  natural  disaster  could  add  “crisis  pressure”  for  some  action.    Cyber  Security    In  terms  of  cyber  legislation  (see  earlier  section),  both  House  and  Senate  leaders  have  designated  this  as  a  priority  issue.  Senate  Commerce  Chairman  Rockefeller,  Senate  Homeland  Security  and  Governmental  Affairs  Chairman  Carper  and  others  have  introduced  S.  21,  a  sense  of  the  Senate  place-­‐holder  bill  to  be  finalized  after  further  discussions  with  colleagues  and  others.  House  Homeland  Chairman  McCaul  is  also  working  on  a  cyber  strategy  with  his  colleagues.  House  Intelligence  Chairman  Mike  Rogers  (R-­‐MI)  and  Ranking  Democrat  Ruppersberger  re-­‐introduced  their  cyber  information-­‐sharing  bill  which  the  House  passed  last  Congress.    Privacy    Privacy  issues  also  remain  front  and  center,  particularly  those  dealing  with  mobile  privacy.  Senator  Rockefeller  will  renew  his  push  for  do-­‐not-­‐track  legislation  and  Senate  Judiciary  Chairman  Leahy  will  seek  to  reform  the  Electronic  Communications  Privacy  Act.  Also,  Senator  Al  Franken  (D-­‐MN)  will  renew  his  geo-­‐location  data  bill.  Rep.  Joe  Barton  (R-­‐TX),  who  co-­‐chairs  the  House  Privacy  Caucus,  is  expected  to  pursue  privacy  issues  including  do-­‐not-­‐track,  protecting  children  online,  and  how  data  brokers  collect  and  use  consumer  information.    Spectrum    FCC  efforts  to  conduct  a  spectrum  auction  and  free  up  additional  spectrum  for  wireless  use,  an  issue  which  concerns  broadcasters  and  wireless  carriers,  and  also  raises  the  question  of  licensed  versus  unlicensed  spectrum  use,  has  generated  congressional  interest.  Rep.  Greg  Walden  (R-­‐OR)  who  chairs  the  House  Technology  Subcommittee  will  conduct  oversight  hearings  in  this  area  to  ensure  that  the  FCC  doesn’t  “pick  winners  and  losers”  and  responds  to  the  need  for  mobile  broadband  as  well  as  public  safety  communications.    The  Satellite  TV  Extension  and  Localism  Act  expires  in  2014,  and  both  House  and  Senate  Commerce  Committees  are  expected  to  act  on  an  extension  this  year.  Because  this  is  considered  “must  pass”  legislation  and  raises  the  thorny  issue  of  retransmission  consent,  it  could  become  a  vehicle  for  other  telecom  issues,  including  the  possibility  of  efforts  to  change  the  1992  Cable  Act  and  the  1996  Telecommunications  Act.  While  many  suggest  that  current  telecom  law  and  common  carrier  rules  do  not  reflect  technology  and  marketplace  changes  that  have  produced  the  IP-­‐based  network  of  today,  the  likelihood  of  a  major  re-­‐write  of  either  the  Cable  Act  or  the  1996  Telecommunications  Act  in  this  session  is  highly  unlikely.      

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Additional  Issues  Other  issues  which  have  been  mentioned  include  the  possibility  of  state  taxes  on  video  goods  and  services.  Both  Senator  Wyden  and  Representative  Lamar  Smith  (R-­‐TX)  had  legislation  on  this  in  the  last  Congress.  Despite  the  demise  of  anti-­‐piracy  legislation  (SOPA)  last  year,  Representative  Robert  Goodlatte  (R-­‐VA)  may  want  to  revisit  the  issue.  The  Immigration  Innovation  Act  offered  by  Senators  Hatch  (R-­‐UT)  and  Amy  Klobuchar  (D-­‐MN)  reforms  the  H-­‐1B  visa  program,  student  visas,  employment  green  cards  and  promotes  STEM  programs.  This  will  likely  be  considered  as  part  of  the  larger  immigration  debate.    Also,  as  various  jurisdictional  committees  conduct  oversight  of  the  Executive  Branch  departments,  we  could  see  concerns  raised  about  the  level  and  effectiveness  of  IT  spending  in  the  departments.  While  this  could  produce  some  budget  revisions,  one  likely  exception  will  be  funding  for  cyber-­‐related  technology  and  resources.    

Trade Trans  Pacific  Partnership  and  Trade  Promotion  Authority  Renewal    While  the  Committees  with  jurisdiction  over  trade  issues  want  to  renew  fast  track  or  trade  promotion  authority  (TPA),  the  Obama  Administration  has  indicated  that  the  initial  focus  in  2013  should  be  the  realization  of  the  Trans  Pacific  Partnership  (TPP).  House  Ways  and  Means  Committee  Chairman  Camp  and  Senate  Finance  Committee  Chairman  Baucus  have  prioritized  the  renewal  of  trade  promotion  authority  this  year,  but  the  Administration  is  suggesting  that  TPA  consideration  wait  until  TPP  negotiations  near  conclusion.      The  Obama  Administration  is  focusing  on  moving  ahead  on  the  most  controversial  elements  of  the  TPP  talks  so  that  negotiations  can  move  toward  completion.  This  effort  will  demand  working  closely  on  difficult  issues  with  Congress  on  the  specific  issues  the  TPA  will  include.  We  expect  that  influential  Members  like  Chairmen  Camp  and  Baucus  will  have  a  number  of  opportunities  to  get  commitment  on  renewal  of  TPA  should  the  Administration’s  desire  to  conclude  a  TPP  be  realized.          Some  trade  analysts  are  predicting  that  the  Administration  could  attempt  to  couple  the  TPP  deal,  which  is  targeted  to  reach  conclusion  as  soon  as  October  2013,  with  a  broader  vote  on  a  TPA  bill  that  would  address  future  negotiations.  While  such  combined  legislation  would  not  enjoy  fast  track  protections,  it  would  provide  the  Administration  with  the  objective  of  having  only  one  major  fight  over  trade  instead  of  two.  Another  scenario  that  may  play  out  would  be  that  the  Administration  holds  off  on  asking  for  TPA  until  there  is  greater  momentum  behind  TPP  but  before  a  definitive  close  to  the  negotiations  is  realized.  A  third  scenario  could  be  that  the  Administration  moves  to  pass  TPP  without  fast  track  protections,  and  only  then  engage  Congress  on  the  issue  of  future  fast  track  negotiation  authority.      Republicans  on  Capitol  Hill  have  long  sought  the  renewal  of  trade  promotion  authority.  Some  Democrats,  including  Chairman  Baucus,  have  TPA  as  a  top  priority  for  the  first  session  of  the  

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113th  Congress.  There  appears  to  be,  however,  much  less  urgency  for  TPA  among  House  Democrats.    Given  that  the  most  recent  TPA  bill  was  enacted  in  2002,  the  business  community  is  seeking  changes  to  the  now  lapsed  legislation.  The  changes  will  fall  into  two  categories.  The  first  covers  so  called  “new  issues”  that  relate  to  electronic  commerce,  free  data  flows,  and  state  owned  enterprises.  Such  issues  were  not  covered  by  the  2002  bill  but  have  been  pursued  by  the  Administration  in  TPP  talks  and  Congress  may  want  to  include  new  language  in  these  areas  in  a  new  TPA  bill.      The  second  category  will  be  how  a  new  TPA  bill  handles  protections  for  the  environment,  labor  rights,  and  intellectual  property.  Members  of  the  New  Democrat  Coalition  in  January  suggested  that  revised  TPA  negotiating  objectives  ought  to  reflect  such  provisions  that  were  contained  in  the  so-­‐called  May  10  deal,  which  provided  enhanced  environmental  and  labor  protections  in  US  trade  deals  as  opposed  to  the  “enforce  your  own”  standard  that  was  the  basis  in  the  2002  legislation.  Senate  Finance  Committee  Ranking  Member  Hatch  has  continued  to  express  concerns  about  such  provisions  in  the  May  10  deal.      The  business  community  meanwhile  sides  with  many  on  Capitol  Hill  in  the  view  that  waiting  to  engage  on  fast  track  reauthorization  until  nearly  concluding  the  Trans  Pacific  Partnership  negotiations  about  would  be  a  mistake.  There  have  been  suggestions  that  TPA  negotiations  will  be  difficult  and  that  they  will  not  get  any  easier  if  negotiations  are  postponed  until  later  this  year.  Additionally,  business  interests  speculate  that  waiting  to  address  TPA  issues  will  likely  bring  about  delay  on  the  realization  of  TPP.  TPA  could  well  provide  for  an  easier  consideration  and  passage  of  the  TPP,  but  the  Administration  argues  that  having  a  strong  TPP  deal  in  hand  would  make  it  easier  to  convince  skeptics  about  the  benefits  of  moving  ahead  on  other  deals,  including  possibly  a  US/European  Union  deal.      Congress  can  and  may  choose  to  kick  off  the  TPA  process  prior  to  receiving  the  request  from  the  Administration  for  trade  promotion  authority.  A  hearing  in  Ways  and  Means  on  fast  track  /  TPA  in  the  ensuing  weeks  may  well  result.  Whether  a  final  TPP  agreement  can  be  reached  before  the  October  meeting  remains  to  be  seen.    U.S./EU  Move  to  Launch  Comprehensive  Trade  Negotiations  Just  hours  after  the  State  of  the  Union  speech,  in  which  President  Barack  Obama  made  a  strong  endorsement  of  free  trade  negotiations  with  Europe,  the  Administration  announced  that  formal  negotiations  on  a  Transatlantic  Trade  and  Investment  Partnership  (TTIP)  were  being  launched.        Earlier  in  February,  foreign  ministers  from  the  European  Union  reacted  with  guarded  optimism  to  Vice  President  Joe  Biden’s  indication  that  an  FTA  with  the  EU  is  a  top  priority  of  the  Administration  and  that  they  wish  to  realize  the  FTA  “on  one  tank  of  gas”  as  the  Vice  President  put  it.  There  was  some  skepticism  to  such  remarks  but  trade  proponents  should  add  the  EU  deal  to  TPP  as  targets  to  shoot  for  through  which  the  Administration  may  reach  goals  set  forth  in  the  President’s  National  Export  Initiative  (NEI).  Announced  in  2010,  NEI  hopes  to:  (1)  improve  trade  advocacy  and  export  promotion  efforts;  (2)  increase  access  to  credit,  especially  for  small  

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and  medium-­‐sized  businesses;  (3)  remove  barriers  to  the  sale  of  U.S.  goods  and  services  abroad;  (4)  robustly  enforce  trade  rules;  and  (5)  pursue  policies  at  the  global  level  to  promote  strong,  sustainable,  and  balanced  growth.    The  Administration  states  that  it  remains  committed  to  realization  of  the  targets  set  forth  in  NEI  and  realization  of  additional  FTAs  like  TTIP  could  help  meet  the  significant  growth  targets  set  forth  in  2010.      In  a  February  12  letter  to  United  States  Trade  Representative  Ron  Kirk,  Senate  Finance  Committee  Chairman  Baucus  and  Ranking  Member  Hatch  conveyed  their  priorities  concerning  the  potential  deal  with  the  European  Union  on  trade,  investment  and  regulatory  cooperation.  Their  priorities  include:  access  for  US  agricultural  exports;  strong  intellectual  property  protection;  access  for  US  services  exports;  regulatory  compliance;  and  a  mechanism  for  dispute  settlement.  The  Senators  also  conveyed  in  the  letter  their  intentions  to  push  for  renewal  of  trade  promotion  authority/fast  track.    

Transportation Reauthorization  of  the  Water  Resources  Development  Act  (WRDA)  The  last  reauthorization  of  water  resources  development  programs  occurred  in  2007.  Congress  made  attempts  in  the  last  Congress  to  move  a  WRDA  bill,  even  most  recently  in  the  lame  duck  Congress  after  Hurricane  Sandy,  but  has  thus  far  been  unsuccessful.  The  WRDA  bill  authorizes  projects  and  programs  of  the  U.S.  Army  Corps  of  Engineers  affecting  navigation  on  inland  waterways  and  seaports,  harbor  maintenance,  as  well  as  flood  control  and  environmental  issues.  Financing  these  programs  going  forward,  as  with  all  federal  infrastructure  programs,  will  be  the  biggest  issue  to  address.  The  Transportation  Committees  in  both  the  House  and  Senate  are  preparing  to  prioritize  this  issue  out  of  the  box  in  the  first  session  of  the  113th  Congress.         Reauthorization  of  Federal  Passenger  (Amtrak)  and  Freight  Rail  programs    Current  authorizations  for  Federal  passenger,  freight  rail  and  safety  programs  expire  at  the  end  of  this  fiscal  year.  Major  issues  to  be  addressed  include  private  sector  involvement  in  the  provision  of  passenger  rail  service,  high  speed  rail,  freight  rail  and  passenger  rail  safety  and  regulatory  issues.            Oversight  of  Federal  Surface  Transportation  and  Aviation  Programs  With  the  passage  of  Federal  surface  transportation  and  aviation  reauthorization  bills  in  the  last  Congress,  the  113th  Congress  will  engage  in  oversight  of  implementation  issues  of  new  provisions  in  both  these  programs.  Oversight  of  Moving  Ahead  for  Progress  for  the  21st  Century  (MAP-­‐21)  will  include  hearings  on  its  environmental  streamlining,  the  federal  approvals  process  for  federal  transportation  projects  and  other  reforms,  the  federal  role  in  transportation,  public-­‐private  partnerships,  and  various  safety  regulatory  issues  in  the  commercial  motor  vehicle  sector.  Oversight  of  the  Federal  Aviation  Administration  Modernization  and  Reform  Act  of  2012  will  include  hearings  on  implementation  of  NextGen  to  improve  efficiencies  in  air  traffic  control,  airport  capacity  issues  and  consumer  issues.            

Darcy Kohn � 2/15/13 11:40 AMComment [15]: Need to mention LaHood?

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Reauthorization  of  Federal  Surface  Transportation  Programs  –  MAP-­‐21  Current  authorizations  for  Federal  highways,  transit,  motor  carrier  and  highway  safety  programs  expire  at  the  end  of  fiscal  year  2014  (MAP-­‐21).  The  113th  Congress  will  begin  the  process  to  reauthorize  those  programs  through  hearings  in  the  1st  Session.  The  major  overarching  issue  to  be  resolved  remains  finding  a  long-­‐term,  stable  source  of  revenue  to  finance  these  programs  into  the  future.        

Travel and Tourism 2012  was  pivotal  for  the  travel  industry  in  America’s  public  policy  agenda.  Last  January,  President  Obama  announced  a  goal  of  attracting  100  million  international  travelers  to  the  U.S.  by  the  year  2021.  In  May,  the  Obama  Administration  announced  the  plan  to  achieve  that  goal  called  the  National  Travel  and  Tourism  Strategy.  The  Strategy  enumerated  the  first-­‐ever  Presidential  vision  for  a  national  travel  and  tourism  policy.  The  plan  included  an  intergovernmental  approach  to  achieve  its  goals  including  the  Department  of  State,  the  Department  of  Homeland  Security,  the  Department  of  Commerce  and  the  Department  of  the  Interior.  In  doing  so,  President  Obama  acknowledged  the  industry’s  role  as  the  number  one  contributor  to  the  U.S.  balance  of  trade;  its  14.4  million  jobs;  and  $1.9  trillion  of  economic  activity.  His  vision  was  to:    

• Work  with  Brand  USA,  the  first  ever  Congressionally  authorized  effort  to  better  market  the  United  States’  travel  brand  around  the  world;  and  

• To  improve  travel  facilitation  to  and  within  the  U.S.,  including:  

o Expanding  the  Visa  Waver  Program  (VWP)  

o Improve  the  visa  experience  

o Expand  the  trusted  traveler  program  

o Improve  and  expedite  the  airport  screening  process  

The  travel  caucuses  in  the  House  and  Senate  are  planning  for  a  robust  agenda  to  keep  the  momentum  of  the  industry  moving  forward.    

There  will  be  two  major  legislative  issues  that  will  impact  National  Travel  and  Tourism  Strategy:  immigration  reform  and  tax  reform.    

On  immigration  reform,  the  travel  industry,  with  one  of  the  most  diverse  workforces  in  America,  will  seek  to  use  the  legislation  to  codify  improvements  to  the  Visa  Waiver  Program  (VWP)  and  other  entry-­‐exit  programs.  Having  endorsed  an  aggressive  national  travel  strategy,  the  support  of  the  Obama  Administration  and  Congressional  Democrats  is  near  certain.      

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On  comprehensive  tax  reform,  authors  of  comprehensive  tax  reform  will  have  to  consider  a  host  of  travel-­‐related  questions  due  to  the  travel  industry’s  overall  impact  on  the  economy.      

Conclusion After  the  November  2012  elections,  it  was  reasonable  to  ask:  “If  the  economy  is  still  in  the  doldrums,  the  President’s  approval  rating  is  not  robust,  and  the  American  people  hold  Congress  in  lower  regard  than  a  root  canal,  then  how  come  voters  didn’t  fire  everyone  and  demand  change?”  Voters  have  always  held  their  individual  Members  of  Congress  in  much  higher  regard  than  they  do  for  the  collective  body.  And  the  President  won,  in  part,  because  he  did  an  effective  job  of  painting  his  opponent  as  a  worse  alternative.  But  Members  of  Congress  and  the  President  are  clearly  aware  of  public  dissatisfaction  with  Washington  and  they  realize  that  their  renewed  lease  on  political  life  is  limited.    In  the  112th  Congress,  both  parties  in  a  divided  government  did  a  good  job  of  protecting  their  core  priorities  and  delivering  their  key  messages,  but  there  was  little  to  show  for  it  in  terms  of  legislative  output.  It  remains  to  be  seen  what  lessons  were  learned  from  the  112th  Congress,  and  how  far  policymakers  are  willing  to  move  from  their  political  comfort  zones.  The  President  no  longer  has  to  worry  about  re-­‐election  in  four  years  and  re-­‐districting  has  likely  put  the  House  majority  out  of  reach  of  Democrats  for  at  least  the  next  four  years.  The  Senate,  where  majority  control  in  2015  is  up  for  grabs,  will  be  the  proving  ground  where  national  public  opinion  and  local  electoral  concerns  meet.      If  Senate  compromise  is  reached,  it  will  reflect  the  fact  that  an  issue  was  either  non-­‐controversial,  a  must-­‐pass  budget-­‐related  item,  or  that  a  bi-­‐partisan  coalition  of  Senators  found  the  right  balance  between  national  and  local  concerns.  The  President  will  applaud  successful  Senate  outcomes.  However,  the  White  House  feels  that  they  can  still  gain  political  advantage  by  characterizing  congressional  Republicans  as  refusing  to  compromise.  The  Administration  will  have  a  relatively  free  hand  in  terms  of  using  their  administrative  and  regulatory  levers.      The  House  has  recently  been  seen  as  the  more  partisan  body.  However,  there  were  strong  bipartisan  votes  on  both  the  bill  to  delay  the  expiration  of  the  debt  limit  and  the  supplemental  appropriation  bill  for  Hurricane  Sandy.  This  may  be  an  indication  that  Speaker  Boehner  is  willing  to  pass  significant  legislation  on  a  bipartisan  basis.  It  is  yet  to  be  seen  whether  these  bipartisan  coalitions  will  continue  or  if  those  were  produced  only  in  the  face  of  pressing  deadlines.            With  the  State  of  the  Union  delivered,  Congress  now  moves  on  to  the  next  budget  battles  and  to  immigration  reform  and  other  big  policy  debates.  Prime  Policy  Group  will  monitor  all  these  issues  throughout  the  113th  Congress  and  provide  supplemental  updates  to  this  document  as  circumstances  warrant.  

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