Transcript The Road Ahead in 2015: A public policy and regulation roadmap for in-house counsel.

The Road Ahead in 2015:
A public policy and regulation
roadmap for in-house counsel
Presenters
Darry Sragow
Partner
Public Policy and Regulation
+ 1 213 892 2925
[email protected]
John Russell
Principal
Public Policy and Regulation
+1 202 408 6392
[email protected]
Megan Delany
Principal
Public Policy and Regulation
+1 202 408 9169
[email protected]
January 14, 2015
2
California Political Landscape
• Registration
• Democrat 43.4%
• Republican 28.4%
• Other 28.2% (No Party Preference
and Third Parties)
• Voter Attitudes
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3
Electoral Drivers
• Term Limits (1990)
• Citizens Redistricting Commission (2008, 2010)
• Open Primary (2010)
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4
CA Policy Focus
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5
Governor's Agenda
• Sustainable Budget
• Education
• Prison Sentencing and Reform
• Transportation, including High Speed Rail
• Climate Change
• Flat tuition for UC students
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6
New Leadership in Assembly and Senate
• Senate President pro Tem
Kevin De Leõn
• Speaker of the Assembly
Toni Atkins
• Minority Leader
Bob Huff
• Minority Floor Leader
Kristin Olsen
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Legislation Introduced / Process & Path to Adoption
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California State Government
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New Laws in 2015
• Mandatory paid sick leave
• Privacy/cyber-data breaches
• Ban on single-use plastic bags
• Arbitration
• Yelp bill
• Film tax credits
• Insurance/ride-sharing companies
• Professional sports teams
• Tribal development
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Meanwhile,
In the nation's capital…
January 14, 2015
11
Republicans Win Solid Majority in Senate
Control of the 113th Senate (2012-2014)
Control of the 114th Senate (2014-2016)
Democratic
Republican
Independent
2
2
45
53
Total Seats
Democrats: 53
Republicans: 45
Independents: 2
54
44
Total Seats
Democrats: 44
Republicans: 54
Independents: 2
Analysis
•Having won most of this year’s competitive races, Republicans secured 54 Senate seats, flipping the Senate from blue to red
•A GOP win in Louisiana was announced on December 6, 2014
•Since Republicans expanded their majority to 54 seats, they will have an easier time passing legislation in the Senate because they will
need fewer Democratic defections to overcome filibusters (which require a 60 vote supermajority)
Source: National Journal Research; CNN Election Center; Associated Press; NBC News.
Republicans Win Record Majority in House
Control of the 113th House (2012-2014)
Control of the 114th House (2014-2016)
Democratic
Republican
Vacant
1
Undecided*
233
199
AK
Total Seats
Democrats: 199
Republicans: 233
Vacancies: 3
246
188
AK
Total Seats
Democrats: 188
Republicans: 246
Undecided: 1
Analysis
• Republicans won a total of at least 246 seats in the House, their largest majority since 1928
• An expanded GOP majority in the House means that Speaker Boehner will have an easier time passing legislation in the House without
Democratic support, and Republicans will also have an easier time holding on to their majority in future elections
* Refers to AZ-2 race, in recount as of 12/8/2014
Source: National Journal Research; CNN Election Center; New York Times.
Few 2014 Senate Races Were Decided by a Close Margin
Margins of Victory in 2014 Senate Elections
Margin of >5%, Dem
Margin of 0-5%, Dem
37%
18%
Margin of 0-5%, Rep
19%
Margin of >5%, Rep
10%
31%
No Election
55%
13%
34%
3%
9%
10%
11%
40%
11%
16%
27%
28% 1%
NJ 13%
DE 14%
2%
30%
17%
16%
23% 100%*
3%
NH 3%
MA 24%
RI 41%
21%
8%
12%
AK
HI 42%
Analysis
• Only 5 Senate races (AK,VA, NC, NH, CO) were decided by a margin of 5% or less; all were held by Democratic incumbents, and 3
were Republican gains
• These results do not necessarily inform 2016 projections; a different set of seats will be up for election, and presidential election
turnout is both higher and demographically distinct from turnout in midterm elections
• In addition, Senate contests, although increasingly nationalized, are still in many ways idiosyncratic, often dependent on local politics and
voters’ opinions of specific candidates
*Jeff Sessions (R-AL), ran unopposed
Source: National Journal Research, 2014; RealClearPolitics, 2014.
Only 5% of House Races Were Decided by a Close Margin
Margins of Victory in 2014 House Elections
Margin of >5%, Dem
Margin of 0-5%, Dem
Margin of 0-5%, Rep
Margin of >5%, Rep
AK
Analysis
• 22 House races were decided by a margin of 5% or less; 14 of those races were won by Democratic candidates, while 8 were won by
Republican candidates
• California accounted for an unusually high share of competitive races this year: seven House races in California were decided by a
margin of 5% or less, and all of them were won by Democrats
• Because so few districts produce competitive races, some observers predict that the GOP will retain their majority in the House until
districts are redrawn following the 2020 census
Source: National Journal Research; AP.
Republicans Will Face Budget Fights
In Early Months of 114th Congress
Prospective Items on Legislative Agenda in 114th Congress
January
Fossil Fuel:
GOP is
pushing for
legislation
approving
Keystone XL,
but is unlikely
to override a
presidential
veto
February
March
April
Debt Ceiling: Watch
for confrontation over
spending & issues R's
could attach to a debt
ceiling deal
Immigration: With the
passage of the
“CRomnibus” in the lame
duck, Congress may
threaten to shut down DHS
over Obama’s executive
action
Doc Fix: Expect another
short-term fix or a longterm plan paid for primarily
through deficit reduction;
conservatives may push to
tie ACA reforms to a
renewal
May
June
Highway Trust Fund:
Republicans will likely
change spending levels
and attempt to eliminate
the gas tax in a Highway
Trust Fund renewal
Export-Import
Bank: Republicans
are split on whether
the bank should
expire; it may or
may not be
reauthorized
Timing Unknown
Appropriations: A regular-order budget is possible, but another CR is a strong possibility; some GOP members have hinted at reconciliation
International Trade: The Republican Senate will likely grant Obama Trade Promotion Authority to sign the TPP and TTIP trade agreements
Affordable Care Act: Barring more extreme action (full repeal or major overhaul) in the wake of a Supreme Court decision eliminating
federal exchange subsidies in King v. Burwell, medical device tax repeal and smaller regulatory changes to coverage requirements are possible
Foreign Policy: A confirmation battle is expected over the nomination of Ashton Carter for Secretary of Defense; Republicans want confrontation with Iran;
President Obama’s actions to normalize relations with Cuba will likely set up battles over confirming an ambassador and/or funding an embassy
FCC/Net Neutrality: Republicans may restrict the FCC’s authority or withhold its funding if it implements more expansive regulations
Tax Reform: Movement on comprehensive tax reform remains unlikely in a Republican Congress, but corporate tax reform is possible
No Child Left Behind: GOP Senators want to push for less federal involvement in school performance evaluation and move more responsibility to states
Online Sales Tax: Not a high priority, but lobbying efforts from states and small businesses may push GOP to allow for an online sales tax
Source: National Journal Research 2014. For issue-specific sources, see issue-specific slides that follow.
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Immigration
•
In the 113th Congress, the Senate passed immigration reform legislation, but it stalled in the House
•
Going into the 114th Congress, political interest in immigration is high due to President Obama’s memorandum providing
deportation relief and access to work authorization to certain undocumented immigrants
Potential Actions in 114th Congress
• USCIS, the agency responsible for carrying out Obama’s deportation memorandum, is
funded primarily by application fees currently outside of the scope of congressional
appropriation
• When the CR for the Department of Homeland Security expires in March 2015,
Republicans plan to attach a provision preventing money collected from application fees
from going to President Obama’s deportation relief program
• It is unlikely, however, that a filibuster-proof majority in the Senate will support the bill,
so it is possible the memo will be upheld with few or no changes
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Tax Reform
•
Despite the efforts of lawmakers from both sides of the aisle to reform individual and corporate tax codes,
fundamental differences between the two parties’ visions of tax reform have prevented a workable
compromise from taking shape
Potential Actions in 114th Congress
• Comprehensive tax reform remains unlikely in a Republican Congress; however, more news of corporate tax inversions could put
pressure on Congress to reform the tax code in some form
• Republicans could use the once-a-year reconciliation process to bypass a filibuster and pass comprehensive tax reform (much like
how the ACA was passed), but this would likely prompt a veto threat from the White House
• Comprehensive reform efforts are unlikely to succeed due to divergent priorities among the parties; for instance, while both sides
generally agree on simplification of the tax code and some reduction of corporate tax rates, Democrats have advocated for a
minimum tax burden on high earners, while Republicans have maintained a push for reduction of individual rates on top earners
• If Congress passes a legislative fix to inversions, expect Republicans to tie it to other GOP priorities, e.g. lower corporate rates
• House Ways and Means Chairman Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) have suggested corporateonly tax reform as a compromise position
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International Trade
•
Two trade agreements, the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment
Partnership (TTIP), need authorization from Congress in order to move forward
•
The administration is seeking Trade Promotion Authority (TPA) to negotiate and sign trade agreements with
limited allowance for Congressional intervention
Potential Actions in 114th Congress
• Top Republicans, including Senate Majority Leader Mitch McConnell (R-KY) and Senate Finance Committee
Chairman Orrin Hatch (R-UT), have voiced their support for TPA; both highlighted the issue as an area for
cooperation with the White House
• Neither the White House nor McConnell have indicated when they would push for a vote on TPA, but such a
measure is nonetheless widely expected to pass some time in 2015
• Congressional Democrats are divided over TPA and a minority of Republicans oppose TPA because they are
uncomfortable with granting the administration additional powers, but they are unlikely to prevent TPA passage
Sources: Vicki Needham, “House Republicans Opposed Fast-Track Authority,” The Hill, November 12, 2013; Zach Carter, “Trans-Pacific Partnership Talks Stir Bipartisan Opposition,” Huffington
Post, November 11, 2013; Vicki Needham and Laura Barron-Lopez, “McConnell Says Obama ‘Born Again’ on Trade Agenda,” The Hill, January 7, 2014.
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No Child Left Behind
•
In the more than a decade since the law’s passage, the bill’s testing provisions have drawn both favor (civil rights groups, for example, support the
tests’ highlighting of racial and class disparities in achievement) and ire (from teachers’ unions, who feel that sanctions harm teacher job security and
that standardized test preparation limits their curricula)
•
The bill is likely to see a reform effort in the 114 th Congress
Potential Actions in 114th Congress
• Rep. John Kline (R-MN) and Sen. Lamar Alexander (R-TN), the chairmen of the House and Senate committees
responsible for education issues, are in the process of drafting a reauthorization of NCLB with a focus on
allowing states to opt in to taking federal education money and allowing states to determine evaluative criteria
for their own education systems
• Democrats have indicated a willingness to reform the law, favoring changes that would lead to less frequent
testing and monitoring and less onerous sanctions on underperforming programs
• President Obama has said that he is open to reform, but will veto a bill that rolls back federal testing completely
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Doc Fix
•
In 1997, Congress created the Medicare Sustainable Growth Rate (SGR) to tie the Medicare budget to the economy’s growth
•
However, health care spending soon outpaced the economy, and since 2003, Congress has passed 16 short-term “doc fixes” to
stabilize provider payments; the current fix expires on April 1, 2015
•
Short-term doc fixes are temporarily cheaper and, as a result, more politically palatable than a permanent fix
Potential Actions in 114th Congress
• If Congress cannot pass a permanent fix, expect another year-long patch in March
• The Republican plan for a permanent doc fix would be paid for mostly by deficit reduction, rather than revenue
increases
• It is possible that a temporary doc fix extension may spark a political fight; Republican leadership used a
procedural vote to pass the last doc fix bill by voice vote with primarily Democratic support, but conservative
anger over this strategy in the 113th will likely mean passage of a short-term fix won’t happen again without
significant conservative backing or a floor vote with Democratic support
• In order to gain conservative support, a permanent or temporary doc fix extension, which Obama may see as too
critical to veto, may be used as a vehicle for ACA reform
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Highway Trust Fund
•
In the 113th Congress, conservative opposition to the federal government’s role in road construction raised
the possibility that the Highway Trust Fund would go unfunded
•
However, a short-term funding compromise pushed this issue into 2015
Potential Actions in 114th Congress
• When the Highway Trust Fund is depleted again in May 2015, expect Republicans to propose eliminating the gas tax and to
negotiate new funding mechanisms and levels
• Some transportation advocates have suggested that falling gas prices could make it easier to increase the gas tax because
consumers would be less likely to notice the tax amid falling prices
• Conservative critics argue that consumers should be allowed to keep the savings generated by lower gas prices; Senate
Environment and Public Works Chairman Jim Inhofe (R-OK) indicated that a gas tax increase was on the table, but did not endorse
this approach
• Some conservative lawmakers and interest groups would prefer to end the program and turn over responsibility for highway
infrastructure to state and local governments
• Nonetheless, the Highway Trust Fund enjoys bipartisan support, and lawmakers are more likely to renegotiate funding mechanisms
or offer cost offsets than scrap the program altogether
Source: Sid Salter, “Highway funding can kicked down the road, but not very far,” Gulf Live, September 3, 2014; Michael Doyle, “Local California officials look for aid on Capitol Hill,” Hilton Head Island Packet, September
10, 2014; Keith Laing, “Boxer to GOP: Focus on Highway Bill, Not Keystone,” The Hill, January 7, 2014; Amy Harder, “Senate Republicans: Higher Gas Taxes Are On The Table,” The Wall Street Journal,22
January 8, 2014.
Affordable Care Act
•
The Affordable Care Act (ACA) has been a political lightning rod since its introduction in 2009
•
Since then, many Republicans have been elected on a platform of amending or repealing the law
•
Public opinion of the law has improved since its implementation, however, and the issue been less
politically prominent as a result
Potential Actions in 114th Congress
• House Majority leader Kevin McCarthy (R-CA) outlined several conservative legislative ideas for ACA reform in a memo in August
2014, such as changing the definition of full-time worker and giving insurance policy holders more options to “keep the plan they have”
• These options that could action in the 114th, but will likely face a presidential veto if passed
• The outcome of a Supreme Court case, King v. Burwell, may throw the Affordable Care Act in jeopardy; if the plaintiffs win, then
subsidies that allow low-income individuals to buy insurance in states that use the federally-established exchange will no longer be
available, which will set off a chain of policy impacts that may make the law at best unenforceable and at worst make health care costs
prohibitively expensive
• A ruling for the plaintiffs would give Republicans a massive bargaining chip in repeal or reform negotiations with the White House; a
ruling on the case is expected in June
• Even without a court ruling, a symbolic full repeal bill is possible; however, it is unlikely that Republican leadership would make either
the debt ceiling or the budget conditional on a full repeal in absence of a ruling in King
• Sen. Rob Portman (R-OH) has suggested a separate repeal of the medical device tax, a proposal with bipartisan support
Source: Sam Stein, “Rob Portman: GOP-Run Senate Would Vote on Obamacare Repeal,” Huffington Post, September 11, 2014; Daniel Newhauser, “McCarthy Says Sept. Agenda Will Confront Obama, Senate
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Democrats,” National Journal, September 4, 2014; Terry Connelly, “Obamacare Dominoes: If Federal Subsidies Fall at the Supreme Court, so Do the Individual and Employer Mandates – Game Over!” The Huffington
Post, November 18, 2014; Roger Parloff, “Supreme Court’s New Obamacare case could be the next Bush v. Gore,” Fortune, November 10, 2014.
Every State Legislature Is More Productive Than Congress
Percentage of Bills Enacted as Law in Most Recent Legislative Session
Legend
WA
0-10%
MT
10-25%
VT
ND
OR
MN
25-50%
ID
SD
WY
>50%
NV
CA
MI
AZ
CO
PA
IA
NE
UT
IL
KS
OK
NM
TX
AK
OH
IN
MO
KY
WV VA
NH
MA
RI
CT
NJ
DE
MD
NC
TN
AR
SC
MS
Congress Enacted 3%
of Bills Introduced
in the 113th Congress
NY
WI
ME
AL
GA
LA
AK
FL
HI
Analysis
• As measured by the percentage of bills introduced that were enacted as law, every state legislature was more productive than Congress
in 2014
• The least productive state legislature, Minnesota, enacted 5% of all introduced bills, which was still higher than Congress’ 3% rate
• Although comparisons are difficult because not all bills are of equal importance, these percentages illustrate the relative ease with which
state legislatures pass laws compared to Congress
• Whereas Congress has experienced years of gridlock and divided government, many state governments are unified under one party and
have simpler procedures for drafting and passing legislation
Sources: National Journal Research; GovTrack.us; StateNet.com.
2016 Presidential Hopefuls
Month Day Year
25
26
27
Priority Issues on the Hill - Republican Governance
not Gridlock
• Cybersecurity
• Limited Immigration Reform
• Tax Reform
• Budget Deal
• Transportation
• Debt Limit
• Trade Deals - TPP and TTIP
January 14, 2015
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The Future
• Boxer seat
• Feinstein seat
• President
January 14, 2015
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Thank you
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