News & Events
The D.C. Update (Vol. IV, No. 2)
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The Week Ahead: January 30 - February 3
The Senate will resume consideration of S 2038, a bill to prohibit commodities and securities trading based on nonpublic information relating to Congress, and to require additional reporting by members and employees of Congress of securities transactions.
The House will continue its attack against the 2010 health care overhaul with a vote next week to repeal a suspended long-term care program (Community Living Assistance Services and Support Act) included in the law.
Banking & Financial Services
President Obama trumpeted two proposals (a task force and a fee increase) in his State of the Union address on Tuesday, January 24, to tackle the fallout from the 2008 housing bust and financial crisis, but only one of them is likely to get off the ground. A financial task force to investigate fraud in the mortgage market can be established under Obama’s executive authority; however a wide-ranging plan to help homeowners refinance their mortgages requires congressional approval and is sure to run into Republican skepticism. Republicans in Congress are likely to balk at what they say is a bailout of irresponsible homebuyers. Even before the plan is fleshed out, the financial industry is readying opposition to the proposed fee increase, which would be levied on financial companies that have more than $50 billion in assets.
The House Agriculture Committee, on Wednesday, January 25, endorsed a handful of bills to narrow the scope of the derivatives portion of the 2010 financial regulatory overhaul, commonly known as Dodd-Frank. One measure amended by the committee would clarify congressional intent with respect to the law’s “end-user exception,” which specifically would exempt non-financial companies that use derivatives to hedge risk from having to meet margin requirements. The committee gave voice vote approval to a substitute amendment that would clarify that affiliates of a non-financial company that use derivatives to hedge risk are also exempt from those requirements. The panel also approved legislation that would prevent the Commodity Futures Trading Commission (CFTC) from defining a swap execution facility to require a minimum number of participants receiving bids or offers.
The Pentagon has proposed a set of major changes to comply with new budget caps, including aircraft retirements, at least one base-closure round and delays and cancellations to major procurement and modernization programs — all moves that defense leaders acknowledged could be a tough sell on Capitol Hill. Defense Secretary Leon E. Panetta formally announced many of the planned cuts Thursday, January 26. The plan trims $487 billion from the planned defense budget over the next decade. In making decisions on specific programs, Panetta said the Pentagon put a premium on “multi-mission weaponry and technology” that can support an agile fighting force. Unmanned systems, satellites, helicopters and aircraft carriers fared well, while more specific, single-mission platforms were targeted for cuts.
President Obama on Friday, January 27, explained in more detail how his new college affordability proposal would shift federal funding away from colleges and universities that fail to keep tuition costs from rising. Obama’s proposal, unveiled in his State of the Union address on Tuesday, January 24, would shift federal dollars for campus-based aid programs away from colleges that fail to keep net tuition down and toward those that are affordable, provide good value and serve a relatively higher number of low-income students.
Proposed legislation that would move permitting authority for the Keystone XL pipeline to the Federal Energy Regulatory Commission (FERC) is vague in some key areas and would not give that agency enough time to properly act, a senior FERC staff member told the House Energy and Commerce Committee, Subcommittee on Energy and Power. Jeffrey C. Wright, Director of FERC’s Office of Energy Projects, said that a 30-day decision requirement in the bill “does not allow sufficient time to build an adequate record to arrive at a defensible decision.” On Wednesday, January 18, President Obama rejected plans for the Keystone XL pipeline, accepting a State Department recommendation that a congressionally mandated February 21 deadline allowed insufficient time for adequate review. However, according to a Congressional Research Service report, GOP Members of Congress have legal grounds to legislatively force the approval of the pipeline.
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House Republicans are preparing a measure that would replace the 2010 health care overhaul once the Supreme Court makes a ruling on the law in June, Rep. Joe Pitts (R-Pa.) said Wednesday, January 25. They are seeking to undo the law’s mandate for most people to be covered by health insurance, and they want to replace the law with a measure that would allow people to purchase insurance across state lines. The replacement legislation would include GOP standbys, including medical malpractice legislation that the committee approved last year. That bill would cap damages for medical malpractice lawsuits, and would impose restrictions on who is liable for damages, but it has run into opposition from Democrats and from some Republicans, who say it would impinge upon states’ rights.
Although lawmakers sound confident about coming to an agreement to stop scheduled payment cuts to Medicare physicians, it remains unclear whether they will coalesce around a proposal to use war fund savings to offset the cost. Advocates of using the offset include several members of the conference committee in charge of negotiating a legislative package that includes an extension of the “doc fix.” Congress regularly passes doc fix patches to prevent the deep cuts to physicians’ reimbursements dictated by Medicare’s sustainable growth rate (SGR) formula, and the current patch blocking a 27 percent rate cut expires February 29.
Immigration and Customs Enforcement (ICE) officials have been reviewing about 300,000 pending deportation cases nationwide and are working to expand a pilot program that grants temporary reprieves to some illegal immigrants, ICE Director John Morton told two Democratic senators and advocates of the program on Tuesday, January 24. The policy, announced over the summer, targets government resources toward deporting undocumented immigrants who commit major crimes and would give a break to people with family ties in this country or who are enrolled in school or are serving in the military.
Senator Mary L. Landrieu, (D-La.), chair of the Senate Committee on Small Business and Entrepreneurship, and Sen. Johnny Isakson, (R-Ga.) have introduced S 2068, the Access to Independent Health Insurance Advisors Act. Sens. Lisa Murkowski, (R-Alaska) and Ben Nelson, (D-Neb.) are also cosponsors of the legislation. S 2068 excludes compensation earned by independent agents and brokers that serve the individual and small group markets from the medical loss ratio (MLR) provisions of the Patient Protection and Affordable Care Act.
House Oversight and Government Reform Committee Chairman, Darrell Issa (R-Calif.) and Health Care Subcommittee Chairman Trey Gowdy (R-S.C.) recently sent letters to HHS Secretary Kathleen Sebelius and the Office of Information and Regulatory Affairs Administrator Cass Sunstein regarding PPACA interim final rules. The Representatives asked Secretary Sebelius and Administrator Sunstein to respond to 25 questions regarding PPACA regulations.
The Government Accountability Office (GAO) recently issued a report regarding Risk Retention Groups (RRGs). Because of varying state interpretations of the Liability Risk Retention Act (LRRA), the GAO recommends that Congress consider clarifying certain LRRA provisions regarding RRG registration requirements, fees and coverage. The NAIC concurred with this recommendation.
In its response to a request for information on the deliberations related to PPACA’s medical loss ratio (MLR) requirements, the NAIC Executive Committee sent a letter to Reps. Fred Upton (R-Mich.), Joseph Pitts (R-Pa.), Michael Burgess (R-Texas) and Cliff Stearns (R-Fla.) stating that the NAIC developed the MLR recommendations using an open, transparent process. Prior to adoption, all issues were discussed on open conference calls and in-person meetings held by the two working groups of state regulators formed to develop the NAIC’s recommendations. The NAIC takes this open and transparent process very seriously and has used it in the past when Congress has required insurance regulatory input, the letter said.
In remarks before insurance industry and trade association representatives at the recent Property & Casualty Joint Industry Forum in New York, Michael McRaith, Director of the Federal Insurance Office (FIO), reiterated that the FIO is not a regulator - that remains the province of the states. Director McRaith stated that subpoena authority is an authority to use as a last resort for critical information that the FIO may need, and is intended to be used only in the absence of another viable source to obtain that information.
On Monday, January 16, Sen. Kent Conrad (D- N.D.) unveiled plans to introduce legislation in the near future to provide a more effective safety net program for farmers. The new program will complement the current federal crop insurance program by providing some protection from shallow losses that crop insurance typically does not cover. The proposal combines the Average Crop Revenue Election (ACRE) and the Supplemental Revenue Assistance Program (SURE) into one streamlined program.
Labor, Pensions & Retirements
House and Senate negotiators displayed sharp partisan divisions and few signs of compromise Tuesday, January 24, during the first meeting of the conference committee charged with preserving payroll tax relief for workers through the end of the year. With just over a month to resolve differences that led to a year-end showdown and a short-term extension of the payroll tax cut, Republicans and Democrats remain far apart on how to pay for legislation expected to cost at least $160 billion. In addition to renewing a reduction in the Social Security payroll tax enacted in December 2010, lawmakers want to continue some form of long-term jobless benefits and a Medicare formula that prevents cuts in payments to doctors. Absent congressional action, each of those programs will expire at the beginning of March, potentially dealing a blow to the economy’s recovery. At the outset of Tuesday’s meeting, House Ways and Means Chairman Dave Camp (R-Mich.) was appointed chairman of the 20-member panel. Senate Finance Chairman Max Baucus (D-Mont.) was appointed vice chairman.
President Obama plans to propose the framework for an overhaul of the corporate tax system next month, White House officials said Wednesday, January 25, providing a broader context for specific tax proposals he discussed in his State of the Union address last week. On a conference call, administration officials offered few details about Obama’s corporate tax plan, other than saying the proposal would involve “simplifying the tax code, closing loopholes” and “broadening the base.” The administration wants a minimum tax levied on profits that companies earn overseas. Resulting revenue would be used to “cut taxes here in the United States.” The plan will also include a permanent extension of the popular research and experimentation tax credit, which has typically been renewed year to year.
With momentum for Internet anti-piracy legislation now halted, supporters are trying to regroup and figure out how to write a bill that can pass muster with the technology sector. There is no readily apparent middle ground between the two sides, beyond the broad agreement that illegal trafficking in music, movies and consumer products on the Internet is a problem. After activists and some major websites, including Wikipedia, staged online protests Wednesday, January 18, supporters of House and Senate anti-piracy bills were in full retreat by the end of last week. And the newly emboldened opposition has few reasons to rush into a compromise. The sidetracked legislation would give the Justice Department and intellectual property holders new tools to try to thwart foreign-based infringing websites.
Transportation & Infrastructure
Congress will get two and a half more weeks to finish a multi-year reauthorization of federal aviation programs once the president signs a short-term bill cleared Thursday, January 26, by the Senate. The Senate cleared by unanimous consent to send the bill to the White House. The House passed it by voice vote on Tuesday, January 24. The measure would extend through February 17, the authority to collect taxes directed to the Airport and Airway Trust Fund, which provides the bulk of Federal Aviation Administration (FAA) funding, as well as the authority to spend money from the fund. It also would provide authorizations for various FAA activities and programs through February 17, including contract authority for the Airport Improvement Program.
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Shane Doucet, Douglas P. Faucette, Denise Hanna, Harriet Miers, Jim Moriarty, Phil Rivers, Mark Siegel, Walter B. Smith, Jr.
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