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The 113t h Congres s Previ ew

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FEBRUARY 2013

2012 POST- ELECTION ANALYSIS | NOVEMBER 2012

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113t h CONGRESS OVERVI EW

112t h CONGRESS RECAP

THE WHI TE HOUSE CONGRESS: SENATE 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 – especially given recent practice – 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 10 incumbent Senate Democrats facing re-‐election in 2014 from Red, or recently-‐Purple 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 the 112th Congress 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, 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. Majority Leader Reid 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 10 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


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Sandy Hook massacre embodied in Vice President Biden’s 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 Hagan (NC), Warner (VA), Begich (AK), Shaheen (NH), and Udall (CO). All except Warner could face a tough re-‐election challenge and even 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 that two years earlier will have voted decisively against President Obama including Senators Baucus (MT), Pryor (AR), Landrieu (LA), and Johnson (SD). The 2014 Democrats will run in the aftermath of a big class of nine Democratic freshmen elected in 2012, three of whom, Donnelly (IN), Heitkamp (ND), and Kaine (VA), triumphed in challenging climates for Democrats and one, King (ME), will look to maintain his independence from the Democratic caucus as much as possible. At the same time, new liberal Democratic women Senators Warren (MA) and Baldwin (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 veteran’s 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 with impunity. 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. 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. 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. 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


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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 made the Senate into not much more of an elite debating society, with dueling political messaging strategies. So, 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. 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 asMinority Leader, leads a more conservative conference 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 also. Significantly, the resolution of a critical debate surrounding Senate rules and the use of the filibuster avoided an otherwise destructive and poisonous issue. By working out an agreement with Senate Democrats, the agreement sets a better tone for the collegial body beginning its work in the 133th 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.

CONGRESS: HOUSE OF REPRESENTATI VES HOUSE REPUBLICANS The House of Representatives will have fewer moderates and as a result be more polarized. The Republican majority will focus on the economy and the need to stop excessive government spending. The House Republican Leadership will adopt a more deliberative legislative process with the goal of confronting Senate Democrats, and not the President, to be accountable for specific policy choices. The lesson learned from the past Congress was the Speaker creates dynamic tension within his party when he secretly negotiates with the President, a member of the opposing party and it is impossible to govern from the House in a divided government with the opposing party controlling the Presidency.


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The Republicans emerged from the election in a strong position in the House. The 234 House Republican membership is the second largest since 1947. Republicans overwhelmingly represent safe congressional districts with only a handful elected with less than 55% of their electorate. The outlook for continued Republican control through the remainder of the decade until the next redistricting occurs is likely. The election saw the continued reduction in the number of conservative Blue Dog Democrats whose seats were claimed by conservative Republicans and the defeat and departure of influential moderate Republicans with the result being a more polarized House of Representatives. As a rule, the President did not perform well against Governor Romney in the Presidential election in their congressional districts. This led to the result of conservative Republicans being elected with very strong margins while the President simultaneously was being decisively defeated in the constituency. House Republicans feel they are instructed delegates representing voters who solidly backed their conservative views while overwhelmingly rejecting the President’s reelection and his first term policy record. This view is best summarized by a widely heard opinion “I cannot believe the President won because everyone I know voted against him”. The House Republicans risk 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 the Democrats hold a 24 seat margin. Redistricting has shifted more seats away from the northern states where Democrats are strongest to the fast growing southern states where t he 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 of House members. For example, almost 90% of southern Republicans opposed the fiscal cliff budget deal while a majority of Republicans from outside the South supported the fiscal cliff deal. We also saw the same voting pattern emerge with the recent vote on aid for Hurricane Sandy. The increased regionalization of the House Republicans creates a brand problem because of the growing perception in other areas of the country that the party is a Southern and rural party. Population shifts have increased the perception which leads to the party’s declining popularity outside of the South and rural areas. This disparity does not appear as much in the Senate where successful nominees have to build broader bases of support to win statewide election. That explains why southern senators voted overwhelmingly in favor of the fiscal cliff deal while their same state fellow Republican congressmen opposed the same deal. The Democrats need to takeover 17 seats to gain a majority in the House of Representatives. That will be difficult in a midterm election where both the turnout composition is much different than in a Presidential election year and where the President’s congressional party has a long record of losing seats. In midterm elections since 1946, the President’s congressional party has lost an average of 26 seats in the House. The President’s congressional party has gained seats only four times since the Civil War and only 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. These voters tend not to participate as much in midterm elections which creates an older less diverse electorate which


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favors Republican nominees. A late surge by House Democrats in 2012 captured several of the most vulnerable Republican held seats and narrowed the margin of defeat for many losing House Democratic nominees. Unless the turnout composition changes historically in 2014 those opportunities will not be available and the Democrats will have to substantially outperform their 2012 effort to win control of the House with a likely far more conservative electorate. Redistricting 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 important 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 keeps incumbents focused 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. Against this electoral background which shapes the views of incumbent Republicans, it is important to look at the approach the House Leadership governs. The House Republicans have a relatively unified policy position but lack the power to govern. In the past two elections Republican congressional nominees were focused on the economy and the need to reduce government spending. 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 is exemplified by 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, such as we saw with the fiscal cliff showdown. This model is best exemplified by Speaker Boehner and Representative Paul Ryan. House Republicans in the new Congress will focus on 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 to side with their Republican senate colleagues. The House Republicans will follow a more deliberative legislative process and avoid simply passing lots of legislation which quietly never sees the light of day in the Senate. Instead, the House Republicans will use the tactic of sending bills to the Senate that moderate Democrats will find


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difficult to oppose; particularly, the significant number of moderates who face reelection in 2014. 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 of the Affordable Care Act and Dodd Frank is proceeding. Former Speaker Hastert used the guiding principle of never bringing a bill to the House floor unless a majority of his Republican majority supported the legislation. This principle became known as “the majority of the majority”. It will be interesting to see if Speaker Boehner follows this principle. 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 their caucus in favor. 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 8 seats in November’s election, Nancy Pelosi 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.

KEY POLI CY I SSUES FOR THE 113t h CONGRESS Appropri at i ons 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—


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the latest example of the deleterious trend away from regular legislative order in the appropriations process. This broken process, the ongoing pressure to cut spending and the renewed ban on earmarks were enough to dissuade two senior Democratic senators from chairing the committee following the death of Senator Daniel Inouye in December. 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. Last October, Congress approved a six-‐month continuing resolution which expires on March 27, 2013. By that date, Congress will either need to pass the appropriations bills (likely in the form of an omnibus) or advance another continuing resolution. Fiscal 2013 negotiations have taken on greater import given the decision by House Republicans to bypass a high stakes fight over an increase in the federal debt ceiling. Instead, they will take their stand on further spending cuts in the context of fiscal 2013 appropriations. House Republicans are vowing to adhere to a $974 billion cap on discretionary spending—a considerable sum below the $1.047 in annual discretionary spending that was assumed in the six month continuing resolution passed in October. Complicating matters, the sequestration of $1.2 trillion over ten years is scheduled to take effect in March as well. Sequestration’s across-‐the-‐board cuts are not strategic or flexible by design, but replacing them may prove politically untenable, especially if fiscal 2013 wrangling leads to a government shutdown. Even as Congress considers its legislative options for funding government through the remainder of fiscal 2013, appropriators will have to begin the fiscal 2014 spending bills. This appropriations cycle too 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, this year is unlikely to be first time since 1993 that Congress passes each of the 12 spending bills before the start of the new fiscal year. 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 following Senator Daniel Inouye’s passing. 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).


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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 Congressman Harold Rogers of Kentucky returns as chairman of the 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, Congresswoman Nita Lowey won her bid to replace Congressman Norm Dicks 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). Congressman 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.” 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 the House has renewed their ban 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.

Agri cul t ure 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, 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


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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 Sen. Cochran (MS) 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 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 the House. 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. Disaster assistance for livestock producers lapsed in 2011. 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 were 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 they 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.

Def ens e With budget sequestration widely expected to reduce FY 2013 defense spending by $43 billion, effective on March 1, the Pentagon has already implemented 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 DoD programs, projects and activities. This will have a significant downward impact on force structure, research & 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, ie. unless Congress and the President can agree on a “grand bargain”, a long-‐term budget solution.


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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. And, 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. 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.

Educat i on Energy and Envi ronment President Obama sought energy reform and climate change legislation during his first term, support he reaffirmed during his Inaugural Address. 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 either through 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. That said the next two years will find advocates of robust energy and climate reforms continuing to lay the groundwork for a time when comprehensive legislation can be enacted. The President, his allies in Congress and the environmental community argue we need to act, citing Superstorm Sandy, record temperatures, and unprecedented droughts and wildfires as evidence that the climate is changing. Meanwhile the entire energy landscape is being rewritten by advances in oil and gas exploration techniques that are projected to propel the U.S. to energy independence by as early as the end of this decade. In this policy environment, making long-‐term decisions on energy investments is getting much harder to handicap for utilities and industry executives. Long-‐term certainty in energy policy, as with tax policy, would be welcome on Wall Street and in corporate board rooms. While energy policy and its impact on climate will be in the forefront of the policy debate, the 113th Congress unlikely will muster the huge political and regional tradeoffs needed to fashion a comprehensive energy bill. While lightning could strike and lead to major compromises on energy regulatory decisions and smaller but still significant legislative skirmishes are more likely and they collectively could alter the energy landscape and affect energy industry investments. The president’s 2nd term will see a significant change in the makeup of his Cabinet with jurisdiction over energy policy. Most significantly, the Administrator of the Environmental Protection Agency, Lisa Jackson, will be stepping down. This provides EPA and the White House


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an opportunity to revisit their aggressive (many say heavy-‐handed) regulatory approach that has focused largely on fossil fuel extraction and emissions. While some candidates for the job are considered more moderate than the outgoing Administrator, it is unlikely the administration changes course on its regulatory goals in this area. Leaving along with Administrator Jackson is Interior Secretary Ken Salazar, who has overseen energy exploration on federal lands. Secretary of Energy Stephen Chu has not announced his plans but is also rumored to be on the way out. Finally, the new Secretary of State, John Kerry promises to be aggressive in pursuing international action on climate which could increase pressure on the Administration to deliver on the domestic front. In Congress, incoming Chairman of the Senate Energy & Natural Resources Committee Ron Wyden and incoming Ranking Member of the Senate Environment & Public Works David Vitter represent major leadership changes. (Ed Markey, Ranking Member of the House Natural Resources Committee, is running for the open Senate seat in Massachusetts.) Wyden in particular is reaching across the aisle to find ways to work with his Ranking Republican Lisa Murkowski and with coast 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 say they will not succeed by an effort to fashion a comprehensive bill can’t be ruled out. We know, however, that 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 to the future of energy policy and have the real potential to change fundamentally the nature of economic drivers in the United States. They are also likely to trigger legislative efforts to affect the Executive Branch outcomes. 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 due with Congress. 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 environmentalists opposed. It is possible a decision to proceed with the pipeline will be coupled by a demand from the administration for investment in renewable energy and energy efficiency programs or other progress on broader climate issues. Regarding 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 are pending at the Energy Department. The domestic natural gas boom is seen as a future game changer for the U.S. economy and for major international markets, but already has altered fundamentally the economics of other energy sources including coal, nuclear and renewables. Studies conflict over the impact 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.


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Chairman Wyden has been skeptical of natural gas exports and will use his committee’s gavel to influence the decision making process. 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. By regulating new 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. Republicans in Congress (along with coal-‐friendly Democrats) will continue attempts to challenge the EPA through legislative action. 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.. 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 clearly 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. Energy tax incentives for both traditional and renewable sources will be reviewed during the tax reform debate. In an effort to streamline the tax code, many of the 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. 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 in Congress from many quarters and is unlikely to be included in any final reform package. (Tax reform likely will be a multi-‐year process.) 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 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 on another. We believe, 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, we can’t rule out an effort to craft something broader, particularly if


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consensus on other earlier measure like immigration and sequestration paves the way for a more cooperative and effective Congress that the 112th.

Fi nanci al Servi ces 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 maintaining their risk adverse outlook. This economic backdrop combined with the zero interest rate policy of the Federal Reserve, 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. 2013 begins 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 issues confronting the Treasury Department. Senate Banking Committee Chairman Tim Johnson (D-‐SD) is joined by a new ranking Republican Senator Mike Crapo (R-‐ID) and a new Chairman of the House Financial Services Committee Jeb Hensarling (R-‐Dallas, TX) and a new ranking Democratic member Representative Maxine Waters (D-‐Los Angeles, CA). The go slow approach of the Senate and the activist focus of the House of Representatives likely will continue, but with several important changes. The Senate Banking Committee is expected to become a much tougher investigative panel with the addition of Massachusetts Democratic Senator Warren. Senator Crapo is well known for his deliberative style that will emphasize oversight to understand the effect and interaction of the hundreds of new regulations being imposed on the financial services sector of the economy. The go slow approach of the Senate Banking Committee is expected to continue. Just the opposite can be expected from the House Financial Services Committee where new Chairman Hensarling, an outspoken free market advocate, will oversee not only aggressive oversight of bank and financial regulators , but also will push legislative ideas to reform government housing support and address problems exposed as the implementation of Dodd Frank continues. 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 since being named the senior Democrat on the committee following the retirement of former Representative Barney Frank. Her evolving role and her relationship with Chairman Hensarling will be interesting to observe for clues whether the Financial Services Committee could actually become more bipartisan with a free market conservative Chairman setting the agenda. The President has named a new head of the Securities and Exchange Commission 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. Does this appointment


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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? There are three dominant 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). Repeal of Dodd Frank will not occur, but change is certain. Implementation grinds on with only 35% of the mandated nearly 400 rulemakings completed as final rules. This is complex and arcane work that has engulfed the regulators at the Securities and Exchange Commission (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. Chairman Hensarling has been an outspoken proponent for abolishing the government sponsored enterprises (GSE’s) Fannie and Freddie, 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 for eliminating the GSEs. With Chairman Hensarling expected to press omnibus reforms, and possible outright repeal, of the GSEs is compromise a possibility? The fact the GSEs survived Dodd Frank without change, the dramatic shift of their financial position to a more positive basis and nervousness over dramatic change as the housing market shows signs of real recovery all are points arguing against significant change to the GSEs. The roll out of the infamous Consumer Financial Protection Bureau (CFPB) nurtured by then consumer advocate now Senator Elizabeth Warren will result in much legislative activity. 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 is funded by the Federal Reserve and, as a result, is not subject to the congressional appropriations process and its oversight. 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. 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. 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.


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There are a number of financial services sector tax issues that will be reviewed when the House Ways and Means Committee develops its individual and corporate tax reform proposal. In addition, payment card issues (credit , debit and prepaid cards) likely will be addressed again as well as the relationship of credit unions with depository institutions, the regulation of mutual funds, insurance coverage for disasters in wake of the experiences of Super Storm Sandy all are other issues likely to receive scrutiny in the new Congress.

Heal t h Care Homel and Securi t y and Cyber Securi t y This year, the Department of Homeland Security marks its 10th anniversary. Throughout the past 10 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 (R-‐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 of reducing the size of the federal bureaucracy, and issued a report critical of DHS work with state and local grants and 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 did 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-‐WVA) 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. As currently written, S 21 is more of a “placeholder” bill to allow supporters the time to work on more detailed language. 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, Cong. Michael McCaul (R-‐TX). Other items on Chairman Carper’s homeland agenda include border security, public safety communications, FEMA oversight, and passage of a DHS Authorization bill. Both Carper and Coburn will focus on DHS management, including ways to reduce spending and limit waste.


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The House Homeland Security Committee will also see a shift in leadership as Cong. Michael McCaul (R-‐TX) replaces Cong. Peter King (R-‐NY) as Chairman. Cong. Bennie Thompson (D-‐MS) will remain as Ranking Democrat. Also, there will be several new members on the committee, most of whom will not have the “in at the beginning” relationship with DHS, 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 comments 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 domain, Homeland involvement 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. Cong. 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. CYBER SECURITY 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 and the issue has resurfaced as a high profile agenda item for the 113th Congress. Numerous bills were introduced in the last Congress. In the Senate, a comprehensive bill (S 3414)introduced by Senators Lieberman (I-‐CT) and Collins (R-‐ME) 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 McCain (R-‐AZ) and 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 (HR 3523) offered by Cong. Mike Rogers (R-‐MI) 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.


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Citing this lack of Congressional action, President Obama has said that he would issue an Executive Order dealing with cybersecurity. The President has met with various private sector groups to discuss their interests and concerns. It has been suggested that an Executive Order might be based on the Lieberman/Collins bill, but with some modifications to address issues raised by various stakeholders. Everyone agrees legislation will ultimately be necessary since there are limits on what an Executive Order can legally accomplish. In the meantime, some Members of Congress have publicly encouraged the President not to use this approach, while others…including incoming House Homeland Committee Chairman Michael McCaul (R-‐TX)…acknowledge that Congress’s own inaction opened the door for the Administration to move. House and Senate committee leaders on both sides of the aisle have indicated that cybersecurity will be a priority this year. Senate Commerce Chairman Jay Rockefeller (D-‐WVA), Senate Homeland Security Chairman Tom Carper (D-‐DE) 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. In the House, primary focus will be in the Homeland Security and the Oversight and Government Reform Committees. In each case, several other committees, including Judiciary, Intelligence, Armed Services, and Commerce will also be active. House Homeland leaders have also put a high priority on cyber issues, and are talking with their Senate colleagues. A primary concern will be whether to move a more comprehensive measure, or to move quickly on less controversial aspects in a piece-‐meal approach. In any 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. One other challenge will be finding the time in view of all the “cliffs” and other priority issues. Several things could impact the schedule in this case: first, a high-‐profile cyber event; second, issuance of the President’s Executive Order; and third, membership changes in Congress and on the jurisdictional committees may create a new dynamic for moving ahead. One other cyber-‐related issue is worth noting. Several departments, including DOD and DHS have noted 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 may be less curtailed than others, even in view of the general concern that IT spending overall may see some reduction.


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I mmi grat i on I nt ernat i onal Af f ai rs The Senate Foreign Relations and House Foreign Affairs Committees have undergone a sea change of leadership with 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 Robert Menendez (D-‐NJ) and Bob Corker (R-‐TN) to be Chairman and Ranking Member, respectively. In the House, term limits and a primary defeat resulted in Ed Royce (R-‐CA) and Elliot Engel D-‐NY) replacing Illeana Ros-‐Lehtinen (R-‐FL) and Howard Berman’s (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 Royce and Corker in international financial and economic issues may spawn cooperative efforts and will certainly drive their respective agendas. Royce has made no secret of his interest in promoting free trade and competitiveness and his committee’s role in authorizing 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. Menendez is likely to cooperate with Corker in much the same way Kerry and Lugar worked together on many issues. Menendez supports Cuba economic sanctions and he will be pitted against freshman Jeff Flake (R-‐AZ) who has made a name for himself in the House opposing Cuba sanctions. John McCain (R-‐AZ) 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 Kerry’s confirmation. Both committees will be consumed with complex country issues including Iran – expect more sanctions tightening, 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 considered in both chambers this year which will, no doubt, address the weaknesses that led to the Benghazi murders, among many other things.

Judi ci ary


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Gun control. With the strong backing of the Obama Administration, Congress is expected to consider legislation that reinstates the “assault weapon” ban enacted in the 1990s and which 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. President Obama has been considering issuing an Executive Order concerning cyber security which, if undertaken, would shape Congressional consideration of that issue. 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 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. Chairman Pat Leahy has said that the Senate Judiciary Committee will take up renewal of the Violence Against Women Act (VAWA).

Labor With recent decisions this year in Michigan and Indiana enacting “right-‐to-‐work” laws that allow employees to opt out of paying union dues when they work for union shops, 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.


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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), wage and hour issues, Employee Free Choice, and Title VII. NLRB 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. Last January, the President made three "recess appointments” -‐ Sharon Block, Terence Flynn, and Richard Griffin to serve as Members of the NLRB -‐-‐ the federal agency tasked with protecting employees from unfair management or union practices. The court’s ruling sides with Republican lawmakers and a canning company that challenged the appointments.

The decision could reshape a long-‐standing practice by U.S. presidents to make recess appointments. Such appointments—which bypass Senate approval to install top administration personnel—have been used by presidents for at least 90 years. The January 25 decision, if it holds, would restrain that power and could void some of the Board’s actions over the past year. The Board made more than 200 case rulings last year, including a decision that protected workers from being fired for complaining about working conditions on sites like Facebook, a decision that gave greater rights to unions in employee-‐discipline cases. The decision also puts in jeopardy recent moves by the Consumer Financial Protection Bureau, since its director, Richard Cordray, also was installed via a recess appointment.

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 industry. The NLRB continues 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 stock the Board with appointees sympathetic to labor organizations.

Committee Perspective 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 Health, Education, Labor and Pensions Committee have loudly supported the D.C Circuit court decision, calling on the NLRB to cease all activity until “qualified’ nominees have been


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constitutionally appointed to the board. From their perspective, any attempt to continue the battle in federal court prolongs the uncertainty the unilateral action has created for America’s workers and job creators. 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 U.S. Department of Labor (DOL) is committed to an aggressive approach with employers that seeks to maximize recovery of backpay and other monetary remedies. Also expect to see more DOL regulatory initiatives in this space. Income Disparity As part of a more comprehensive initiative aimed at reducing the growing problem of income inequality in America, it is likely that the President will call for an increase in the Federal minimum wage. Currently set at $7.25 per hour, the last Congressional action authorizing an increase in the 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 the “Notice Poster” Rule 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. Rules such as the NLRB’s “Notice Poster” rule, is one such case. The rule would require employers to display an 11-‐by-‐17-‐inch poster in their workplace that provides a list of employee rights under the National Labor Relations Act (NLRA). The rule has been subject to several legal challenges asserting that the NLRB lacks authority under the NLRA to issue and enforce the poster requirement. The NLRB is prevented from enforcing the rule while such appeals are pending. The “Notice Poster” rule could have a significant impact on small businesses. The rule is ultimately about power and whether the NLRB has the right to enforce such actions or if it is outside of their authority. The decision in this case will have major implications as to how far the NLRB can go within this rulemaking realm. While a decision was expected at the end of January, the court has yet to rule on the case. A decision is not likely until early spring. Ambush Election Rule The outlook for the “Ambush Election” rule is currently a positive one from a business perspective, though much depends on the outcome of the Noel Canning case and whether it will affect the makeup of the NLRB. As it stands, the NLRB has taken its appeal to court, but has not pushed a response. We do not expect one until later in the year. If the NLRB membership gets restructured (this would take place if Obama’s recess appointments are found unconstitutional) the decision on the “ambush election” rule could be mute. However, in the case of a new NLRB, they would likely re-‐issue an “ambush election” rule. If this is the case, many in the business community will likely fight it and be in a strong position to do so.


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Persuader Rule The Department of Labor’s (DOL) proposed “Persuader” rule would narrow the exemption of “advice” from the “persuader activity” reporting requirements under current law. The final rule is not yet out, but is expected in late April. Primarily at issue is DOL’s intent to drastically change the accepted definition of “advice,” which for over 50 years has been held to refer to a consultant’s activity that “is submitted orally or in written form to the employer for his use.” As a result, consultants do not have to disclose advice on behalf of their clients regarding union issues to the Department of Labor. However, DOL is now proposing to broaden the scope of reportable persuader activity – and its own regulatory reach – by expanding what "persuasion" means. With the proposed expansion of “persuasion,” the narrowing of the "advice exemption" is especially significant. Any advice that a consultant might give to a client regarding “collective bargaining” issues would have to be filed and formally disclosed as public information. 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 The American Taxpayer Protection Act (ATPA) avoided the fiscal cliff in early January. With the passage of the ATPA, 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 ATPA inverted who pays the top rates: individuals now pay the highest tax rates in the United States. Prior to the ATPA, corporations and individuals shared the top statutory tax rate of 35 percent. However, 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 in the summer of 2013. Congress will have to address these issues immediately. Despite this immediate fiscal focus, Chairman Camp has indicated publically and privately that he intends to bring a legislative product to the Ways and Means Committee soon – even ad early as this summer. While it is true that some revenues were gained by the increased tax rates in ATPA, 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. And there are still revenues to be gained by eliminating various tax deductions


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and credits while the need to lower the corporate tax rate – now the highest in the developed world with Japan– is still paramount. Tax Reform The tax writing committees in Congress were assertive with their hearing schedules and legislative initiatives in the last Congress. As we have noted, the leadership of both parties in Congress is committed to comprehensive tax reform, most likely in this Congress.

• Chairman Dave Camp (R-‐MI) 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. He has also asked Committee Republicans to withhold bill introductions on tax matters until the Committee acts.[Sensitive, include?] It has been suggested that Chairman Camp may want to hold a markup as soon as this summer.

• 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. [New Treasury Secretary Jack Lew stated that the Administration supports efforts by Congress for a more competitive tax system in his confirmation hearings. Watch this to confirm.] A key element will be whether the President will put the political force and emphasis behind a comprehensive deal.

• Chairman Max Baucus (D-‐MT) 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.

Could corporate tax reform be considered first? This is possible because both the President’s “Framework” and the discussion drafts offered by Chairman Camp 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 are not to the 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 standalone measures. We believe that they will keep to 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. We will keep you informed.

Technol ogy 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


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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 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 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, a Presidential directive or Executive Order on cyber or other areas could prompt Congress to act. Similarly, FCC, FTC or court decisions (think net neutrality or spectrum auctions) could also have 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. In terms of cyber legislation (also discussed in another section), both House and Senate leaders have designated this a priority issue. Senate Commerce Chairman Jay Rockefeller (D-‐WVA), Senate Homeland Security and Governmental Affairs Chairman Tom Carper (D-‐DE) 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 Michael McCaul (R-‐TX) is also working on a cyber strategy with his colleagues. House Intelligence Chairman Mike Rogers (R-‐MI) plans to re-‐introduce his cyber information-‐sharing bill which the House passed last Congress. 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 Patrick Leahy (D-‐VT) will seek to reform the Electronic Communications Privacy Act. Also, Senator Al Franken (D-‐MN) will renew his geolocation data bill. Two House Members-‐-‐-‐Cong. Mary Bono-‐Mack (R-‐CA) and Cliff Stearns (R-‐FL) have left, but Cong. 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. 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. Cong. 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


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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 96 Telecommunications Act in this session is highly unlikely. Other issues which have been mentioned include the possibility of state taxes on video goods and services. Both Senator Wyden (D-‐OR) and Congressman Lamar Smith (R-‐TX) had legislation in the last Congress. Despite the demise of anti-‐piracy legislation (SOPA) last year, Congressman Goodlatte (R-‐VA) may want to revisit the issue. The Immigration Innovation Act, offered by Senators Hatch (R-‐UT) and 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 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 Head Trade Agenda 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 provided behind realization of the Trans Pacific Partnership (TPP). House Ways and Means Committee Chairman Dave Camp (R-‐MI) and Senate Finance Committee Chairman Max Baucus (D-‐MT) 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 what the TPA will contain. One can expect that influential Members and Senators like 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 hold 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


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Administration move 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 113th Congress. There remains, however, much less urgency for TPA from 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 contained in the so called May 10th 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. Senator Orrin Hatch(R-‐UT), the Ranking Member on Senate Finance Committee, has continued to express concerns of such provisions in the May 10th deal. The business community meanwhile sides with many on Capitol Hill in that waiting to engage on fast track reauthorization until nearly concluding the Trans Pacific Partnership negotiations 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. We expect to get a sense of how things will shake out soon from the Ways and Means Committee leadership under Chairman Camp and Trade Subcommittee Chairman Devin Nunes (R-‐CA). A hearing in Ways and Means on fast track / TPA in the ensuing weeks may well result. Meanwhile, we will continue to monitor relevant developments involving the final few rounds on the Trans Pacific Partnership negotiations that take place leading up to the Asia-‐Pacific Economic Cooperation forum scheduled to take place in Indonesia this October. Whether a final TPP agreement can be reached before the October meeting remains to be seen. Whether or not Congress moves to consider tax reform will also factor into whether or not fast track reauthorization is pursued during the 113th Congress. Prior to the agreement on individual income tax rates earlier this year, it was anticipated that Congress would have a


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primary focus on working on corporate and individual tax reform in the 113th Congress, which would possibly take up much of the schedule for the House Ways and Means Committee and Senate Finance Committee. With the individual income tax rate debate having been settled in a deal earlier this year, urgency for tax reform has been lessoned according to some legislators, and certainly according to officials in the Obama Administration. This may provide the committees of jurisdiction more time to work on realization of the Trans Pacific Partnership and Trade Promotion Authority. US / EU Move to Launch Comprehensive Trade Negotiations The United States and European Union (EU) are expected announce in the weeks ahead the launch of comprehensive trade negotiations, and are currently considering an approach that would allow different areas to move forward along various schedules while under a broader unified undertaking. Such an approach could allow for difficult areas, like regulatory issues, not to side track other areas that could move more efficiently. Decision like these will be finalized as the High Level Working Group negotiations are expected to conclude and the launch of formal negotiations results. Earlier this month, 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 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 should help meet the significant growth targets set forth in 2010. USTR Kirk Stepping Down at End of February United States Trade Representative Ron Kirk announced January 22, 2013 that he would be leaving his post in late February. Kirk was successful in ratifying agreements negotiated under the Bush Administration, which included FTAs with South Korea, Panama, and Colombia. The following individuals are rumored candidates to be named as Kirk’s replacement:

• Lael Brainard, current Undersecretary of the Treasury for International Affairs • Francisco Sanchez, current Undersecretary of Commerce for International Trade • Mike Froman, current Undersecretary of National Security Administration for

International Economic Affairs • Chris Gregoire – outgoing Governor of Washington • Howard Berman – former Member of Congress • Cal Dooley – former Member of Congress


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• Tom Donilon – National Security Advisor

Trans port at i on Priorities for transportation in the 113th Congress include: Reauthorization of the Water Resources Development Act (WRDA) The last reauthorization of water resources development programs occurred in 2007, over five years ago. 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 US Army Corps of Engineers affecting navigation with inland waterways and seaports, 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. 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, a controversial issue which divides along partisan, geographic and labor lines, high speed rail and freight rail safety 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, federal approvals process for federal transportation projects and other reforms, as well as the volume of significant new safety regulations on 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, as well as consumer issues. 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 Touri s m Last year was pivotal for the travel industry in America’s public policy agenda. In January, President Obama announced a goal of attracting 100 million international travelers to the U.S.


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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 extraordinary role as the number one contributor to our 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 US, including:

o Expanding the VWP (the 38 countries in the VWP account for 65% of all international travel to the U.S.).

o Improve the visa experience

o Expand the trusted traveler program

o Improve and expedite the airport screening process

The good news is that the economy and industry are already seeing real improvement on a number of these fronts: visa wait times are dramatically down in China, Brazil, Argentina, and numerous other countries; TSA is reporting shortening lines nationwide; TSA personnel are now receiving hospitality training so as not to offend travelers; and airport signage is becoming clearer and more universal in application. The travel industry plans to build on the successes of 2012 and plan for a future of sustained achievement. The travel caucuses in the House and Senate are planning for a robust agenda to keep the momentum of the industry moving forward.

However, policy makers and stakeholders alike are intensely aware of the myriad challenges that exist. Working within budgetary and political constraints will be a delicate matter. Some of the challenges are:

• International travel is booming and global travel spending is set to reach $2.1 trillion by 2020. Domestic travel remains strong as well. However, U.S. aviation infrastructure is outdated and cannot keep up with demand. Our air traffic control system is a relic of WWII; we have the most congested skies in the world; our airports don’t have enough runways and our terminals have become chokepoints.

• Our global competitors are spending like crazy on promotion; infrastructure; and infrastructure modernization.


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As these national issues go unaddressed, the consequences become more acute: o Delays lead to lost productivity: Each year, Americans lose $9 billion in

productivity due to flight delays. The NY Metropolitan Region estimates that by 2025 air-‐traffic congestion will create productivity losses costing the region 5,600 jobs, $16 billion in lost output, and $5.5 billion in lost labor

o Trips never taken costs U.S. businesses: The flights Americans avoid—due to travel hassles, delays and frustrations—weaken our economy. One study estimates airlines lost $9 billion, hotels $6 billion, and restaurants $3 billion in revenues due to avoided trips. Overall, the government lost the opportunity to capture $4 billion in tax revenue. A 2008 travel industry study reported that frustration with the travel process caused people to avoid 41 million trips that year.

o By 2025 delays at Newark, LaGuardia, and JFK airports could cost the regional economy some $79 billion.

Industry organizations are trying to maximize their growing, bipartisan, economic stature in Washington by initiating or expanding ongoing travel initiatives that intersect with various public policy debates:

• Meetings Mean Business: Every ill-‐advised comment knocking meetings and events, travel to Las Vegas, corporate meetings and the like, creates unfair disincentives to travel. As all of you know, no conference call can ever replace the value of a handshake and a shared meal.

• Vacations provide more than just a respite: Time off is good for the body and the soul, and Americans have nothing to be proud of as the developed nation whose citizens are least inclined to use-‐up their annual leave.

• Our 20th Century infrastructure is stifling economic growth. Meaningful new investments in infrastructure would create jobs and spur economic growth.

Lastly, it is worth noting the two Federal legislative issues that are most likely to affect the travel space and demand the attention of law makers. Both issues will be dramatically affected by the recent election results and the changing demographics in America.

The first is comprehensive immigration reform. The needs of American employers and employees will best be addressed through a new process that better reflects 21st century marketplace realities. The travel industry, with probably the most diverse workforce 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


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of the Obama Administration and Congressional Democrats is near certain. For political reasons manifestly obvious in last month’s election results, most GOP leaders are likely to support immigration legislation this time around. The second and larger challenge will be comprehensive tax reform which will be considered later this year, separate and apart from the fiscal cliff deal, and will have two components:

• At the corporate level, taxes paid affect capital available. In many companies, capital available defines corporate discretionary spending for functions like travel budgets, meetings, and events.

• At the personal level, taxes directly affect the highly elastic, discretionary spending decisions that we all make about choices for things like dining out, vacations, retail shopping, and the like.

According to the U.S. Travel Association, business travel serves as an enormous economic catalyst that improves corporate productivity and generates additional economic activity that greatly exceeds the direct expenditure on travel by a factor of 10 to 1.

Authors of comprehensive tax reform will have a host of travel related questions to ponder while fully consider the overlapping and sometimes incongruous needs of reducing the deficit while still stimulating the economy. In practical terms, that means asking questions like:

• Will business meal deductibility be retained at any level? • Will the spousal travel deduction ever be restored • What will Congress do about the current panoply of Federal airline taxes? Did you know

that right now there are 17 separate Federal taxes and fees that account for $61 of the cost of a $300 roundtrip domestic airline ticket?

• Will they use the tax code to create new incentives or disincentives for meetings and events

113TH CONGRESS PREVI EW Although the largely status quo election increases the likelihood that President Obama and Congress will adopt a framework in the Lame Duck session to avert the fiscal cliff, actually addressing the structural issues that underlie the fiscal cliff will likely remain a task for the 113th

Congress.


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The fiscal issues looming in the new year are daunting by any measure. Absent a Lame Duck budget deal, in January 2013 most taxpayers will see an immediate increase in their taxes with the expiration of the payroll tax cut, the marginal rate for all taxpayers will increase, and the statutory sequestration of $1 trillion in defense and domestic spending cuts over ten years will begin to take effect. In addition, the current Continuing Resolution (CR) is set to expire on March 27, 2013. Even if all parties reach a Lame Duck deal to avoid sequestration, it is unlikely that Congress can achieve, either in the Lame Duck or in the first months of 2013, the breakthrough agreement that definitively addresses all aspects of the Grand Bargain. Instead, the more likely scenario is a more incremental package requiring Congress to meet the established targets by a certain deadline and impose harsh mandate penalties should Congress fail to meet the goals presented in the framework agreement. The most likely scenario for a Grand Bargain deal is one that re-‐engineers a package similar to the $4 trillion in debt reduction negotiated by President Obama and Speaker Boehner in the summer of 2011 – which both parties walked away from after the deal fell through. Given the sweeping nature of that 2011 package, and the professed willingness of both sides to take on other issues such as tax reform, the Grand Bargain debate will likely include changes to the individual and corporate tax rates, mandatory cuts to discretionary spending, reforms to entitlement programs such as Social Security and Medicare, and a revisiting of the sequestered cuts to defense and Medicare programs mandated by the Budget Control Act of 2011. Congress is likely to deliberate on the thorny issues of energy and immigration. Each of these two issues played a major role in the election, and President Obama is likely to press Congress on these matters. In addition, the Congress will take up a host of possible unfinished legislative initiatives from the previous Congress including the Farm Bill, cybersecurity, and unfinished fiscal 2013 appropriations bills. Also looming in 2014 is the expirations of the federal surface transportation programs. OTHER EXPIRING REAUTHORIZATIONS: H.R. 2269 S. 550 FIRE Grants Reauthorization H.R. 5949 S. 3276 FISA Reauthorization H.R. 4310 S. 3254 Defense Reauthorization

H.R. 1418 S. 2231/S.509 Credit Union Lending H.R. 5743 S. 1458 Intelligence Reauthorization H.R. 1852 S. 958 Children's Hospitals GME Reauthorization H.R. 4970 S. 4982 Violence Against Women Reauthorization H.R. 1291 / H.R. 1234 S. 676 Carcieri Fix


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The Congress is sure to consider a great number of weighty issues in the 113th Congress, but it is much less clear whether the two parties can come to an agreement on the big deals that eluded them in the previous Congress.

KEY LEGI SLATI VE DATES November 13: Lame Duck Session Convenes November 13: House Republican Leadership elections possible this week November 14: Two party leadership elections in the Senate November 22: Thanksgiving Day November 29: House Democratic Leadership Elections Late November – Early December (House leadership to set exact date): Retiring or defeated Members have to be out of their offices December 25: Christmas Day December 31: Expiration of Bush tax cuts, expiration of unemployment benefits, expiration of “Doc Fix,” and the deadline given by Treasury to address the debt ceiling. January 2: Sequestration occurs *SENATORS UP FOR ELECTION IN 2014 Democrats (20) Republicans (13) Baucus, Max (MT) Alexander, Lamar (TN) Begich, Mark (AK) Chambliss, Saxby (GA) Coons, Chris (DE) Cochran, Thad (MS) Durbin, Richard J. (IL) Collins, Susan (ME) Franken, Al (MN) Cornyn, John (TX) Hagan, Kay (NC) Enzi, Michael B. (WY) Harkin, Tom (IA) Graham, Lindsey (SC) Johnson, Tim (SD) Inhofe, James M. (OK) Kerry, John (MA) Johanns, Mike (NE)


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Landrieu, Mary L. (LA) McConnell, Mitch (KY) Lautenberg, Frank R. (NJ) Risch, Jim (ID) Levin, Carl (MI) Roberts, Pat (KS) Merkley, Jeff (OR) Sessions, Jeff (AL) Pryor, Mark (AR) Reed, Jack (RI) Rockefeller, John D., IV (WV) Shaheen, Jeanne (NH) Udall, Mark (CO) Udall, Tom (NM) Warner, Mark (VA)

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