The 111th Congress’ Last Breath

Words: Matthew AdamsAs widely speculated, Republicans took control of the House of Representatives, picking up 61 seats, for a majority of 240-189. As of this writing, six House races still have not yet been decided as recounts persist. Republicans also made gains in the Senate, picking up six Senate seats, to reduce the Democratic majority to 53-47.

With Republican House control, there will be a number of new faces in Congress who will focus on spending reductions, banning earmarks, repealing parts of enacted policy such as healthcare, and slowing the growth of government. There is talk of reducing the size of committees, and some committee chairmanships remain up for grabs. However, the policy direction and philosophy of the House will change.

The House Republican Conference pledges in their “Promise to America” to restore limited, constitutional government. While this could mean a repeal/de-funding of previously enacted policies from the 111th Congress, finding legislative success in the 112th Congress means offering policy alternatives that will not require government spending and reduce government involvement in markets and regulation, and finding sensible, bipartisan solutions in the Senate.

With a narrowed majority for Senate Democrats and ideologically-driven new Senate Republicans, a case for legislative gridlock can be made.

Potential Lame Duck Issues

Congress plans to convene for the Lame Duck on Nov. 15. “Must-pass” legislation (expirations, ongoing funding) will be dealt with first, and the rest of the agenda will be determined, based on what could pass the Senate.

Given the time constraints before Christmas (about 4.5 weeks for votes) and the hours required to move through procedural hurdles in the Senate, it could be likely that the Senate only will be able to address a continuing resolution to keep the government funded (until early-2011), a compromise on extending pieces of the 2001 and 2003 tax cuts that expire at year’s end, and possibly a “delay” of the Medicare doctor’s reimbursement (for up to 13 months).

Appropriations (Omnibus/CR)

The largest issue is continued funding for federal government operations. Congress passed a “continuing resolution” through Dec. 3, 2010, and will need to pass additional short- or long-term continuing resolutions or an omnibus appropriations bill for FY11. It appears that a CR through the first quarter of 2011 may be likely.

The Senate Republicans also may begin forcing votes on targeted spending cuts, focusing on reducing program-level discretionary spending. These votes also may target defunding or not funding aspects of the healthcare law. These targeted efforts are likely to continue in the 112th Congress.

Expiring Tax Cuts

Many tax cuts from 2001 and 2003 expire at the end of the year, and Congress must decide which cuts to extend and which cuts would expire, in addition to addressing the alternative minimum tax, estate tax, capital gains tax, and a host of other tax issues.

The White House appears open to considering a full extension of all the soon-to-expire 2001 and 2003 tax cuts during the Lame Duck session. Congressional Republicans want to see all the tax cuts extended, and the White House and Democrats want to ensure that at least the middle income (under $250,000) cuts are extended.

Republicans and some Democrats have discussed a one- or two-year extension of all the tax cuts as a favored option.

Additional conversation since the elections has Democrats discussing a middle class cutoff line of $500,000 or $1 million. The middle class cuts could be extended permanently, while anything over the threshold would only be extended short-term (one to two years).

The AMT and estate tax may not be addressed, forcing reform or retroactive extension in the 112th Congress.

Healthcare Law

While much of the de-funding efforts will occur in the 112th, Republicans will target certain aspects of the healthcare law, such as the 1099 requirement, for repeal during the Lame Duck.

“Doc” Fix (Medicare Reimbursements)

Republicans prefer to fix the reimbursement issue with a long-term solution, but that won’t be feasible until next Congress, given the complexity of the sustainable growth rate and the cost. However, a delay in the cuts could be in play during the Lame Duck.

Other Issues

Talk remains about addressing domestic policy initiatives as well, such as immigration reform (DREAM Act), child nutrition and food safety legislation, Chinese currency manipulation, START treaty, Defense Authorization, public safety collective bargaining, and energy legislation, among others. However, there is not much legislative time left in the year, and Republicans appear willing to force procedural votes on anything that comes to the floor. Therefore, the odds favor a truncated policy agenda during the Lame Duck, although it will take considerable time to debate legislation, overcome procedural votes, and pass bills.

112th Congress Possible Legislative Issues

Spending/Budget
The House Budget Committee (likely Chair: Ryan) will offer a FY11 budget that seeks to limit federal spending to earlier levels (FY10 or earlier) in efforts to “hold the line” on spending. It is very likely that House Republicans will continue with a ban on earmarks.

The Senate Republicans likely will force votes to reduce program-level spending in a number of discretionary domestic programs.

“Repeal-and-Replace” efforts on the enacted healthcare reform likely will turn into targeted efforts to prevent spending on certain aspects of the law.

Oversight Agenda
Both House and Senate Republicans are committed to calling Administration officials before oversight committees to defend agencies’ actions on legislation such as healthcare and financial reform, spending, stimulus and other actions related to climate change and more.

Healthcare Law Repeal
Both House and Senate Republicans likely will push for votes on straight repeal of the broad overhaul, but these efforts are destined for failure in the Senate. Therefore, the House will take the lead on blocking funding for implementation of the law via appropriations, and the Senate Republicans would seek repeal votes on “egregious” aspects of the law, such as the 1099 provision and others (if not done in the Lame Duck).

Major Reauthorizations/Issues of Interest
  • Elementary Education Reauthorization (NCLB)

  • Transportation Reauthorization (TEA-LU)

  • Aviation Reauthorization

  • Farm Bill Reauthorization

  • Energy-Related Issues

  • Telecom-Related Issues 
(net neutrality)

  • Ongoing Healthcare/Stimulus/Financial Reform Implementation/
Funding/Repeal
For more information, contact The Keelen Group, 202-463-3217 or mkeelen@keelengroup.com.
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