The Waiting Game
The government shutdown lasted just over two weeks. After continuous name calling, blaming and political insults, the House and Senate finally agreed on a deal that would essentially almost ensure another fiscal showdown at the beginning of 2014, a midterm election year. The line between the winners and losers, which you have undoubtedly heard extensively about on the news, is a bit inconsequential as neither side can claim victory over an issue that remains unresolved.
As a part of the deal reached on Oct. 16, 2013, the federal government will be funded until Jan. 15, 2014, just 12 weeks from the agreement, and the federal debt ceiling will be raised to allow borrowing until about Feb. 7, 2014, just a 15-week extension. Additionally, both the House and Senate have agreed to give back-pay for federal workers who were furloughed as a result of the shutdown, fraud protection measures to ensure individuals signing up for the new Obamacare exchanges give accurate information about their earnings and to convene a budget conference to negotiate their respective budget resolutions and future spending levels.
The Democrats’ goal in these negotiations will be to replace budget cuts with new revenue, whereas the Republicans’ goal will be to decrease federal spending levels through reforms to entitlements.
The House Republicans will bear the brunt of the blame for the government shutdown and politicizing their intent to defund Obamacare. However, neither party can claim victory over an issue that both parties agreed to debate at a later date. President Obama’s openly critical attacks on Republicans and refusal to negotiate a way to reopen the government will be seen as a short-term win, but may have only created an environment for more heated negotiations at the beginning of 2014. President Obama, who in two elections campaigned on creating a post-partisan political environment in Washington, has set the stage for a contentious and divisive negotiation.
With all the uncertainty in Washington, I wanted to take this month’s Inside Washington to respond to some of your questions about what’s been going on in the District of Columbia on Capitol Hill. These were questions submitted by members that are relevant, pertinent and consistently asked. If readers have questions they would like addressed in the Inside Washington column, please feel free to send those questions to will@nuca.com.
On Oct. 1, right at the beginning of the government shutdown, the Obamacare exchanges opened for new enrollees, but I thought that President Obama had delayed the implementation of Obamacare for a year. If the President delayed Obamacare’s start, why are the exchanges opening this year?
Generally speaking, the insurance arm of the Affordable Care Act (ACA or Obamacare) is split into two distinct mandates under the law. The employer mandate requires all employers with more than 50 employees to provide health insurance coverage to its employees or face fines on a per-employee-not-covered basis. The individual mandate requires most American citizens to obtain and maintain some level of health insurance or pay a fine. What President Obama has done is delay only the mandate that businesses provide health coverage by announcing that he will not enforce the employer mandate until 2015.
The Oct. 1 roll-out of the open enrollment only deals with the individual mandate on citizens who will obtain their health coverage through one of the state-run exchanges. The exchanges were set up for individuals who do not have coverage to obtain insurance with government subsidies. Eligible individuals have until Jan. 1, 2014, to enroll in a plan to avoid the penalty. Not every state has agreed to set up an exchange; some state exchanges are not ready and problems with the website for enrolling in these exchanges has made the kickoff to ACA look more like a flop than fireworks.
Keep in mind though, that the Department of Health and Human Services is expected to continually roll out guidance and regulations concerning ACA, so the program we see on Jan. 1 will likely be drastically different than the program in 2015 when the employee mandate will begin being implemented.
At the beginning of the year, there seemed to be a lot of motivation and talk about Congress enacting some sort of comprehensive tax reform. I haven’t heard much about it in several months. Has the motivation to simplify the tax code dissipated? What is the status of tax reform?
Since March, House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) have supposedly been engaged in negotiations about framework for tax reform. As of press time, no formal or written plan had been articulated or heralded by either committee. Both Committee staffs have been saying since spring that a plan is forthcoming but without any indication of when.
Committee staffs have been equally secretive about what tax reform will include. The general consensus among those who are not directly involved in the negotiations is that the committee’s overall goal is to seek a 25 percent effective corporate tax rate. This would essentially flatten the tax code for corporations because in order to get to that rate, current tax loopholes, breaks and credits would need to be either eliminated or sizably scaled back.
The political opportunity for tax reform has never been better, but with the 2014 election cycle approaching in less than a year, that window is closing. Congress is notorious for lackadaisically legislating during election years, and with the divisiveness of the current Congress, it is likely that will be exceptionally true again next year.
Congress seems to be more polarized than ever. Neither party seems willing to work together and is only interested in playing the blame game. Do you see any end to the partisan bickering?
This very nicely fits into the end of my answer to the previous question. Predicting politics and Congressional action is a fool’s errand, so I won’t predict what will happen. That being said, there are some things that are worth keeping in mind.
Both President Obama and newly elected Republicans campaigned on the Affordable Care Act. President Obama advocated its merits, whereas many Republicans ran on the promise to repeal. Both won their elections and both, in my opinion, have overestimated what their election means in terms of the “will” of the people.
But also keep in mind, that exactly 534 members of Congress are elected outside of the District of Columbia. Changes about Washington very rarely, if ever, come from Washington and the growing understanding of local politics from inside the beltway is that Americans are outraged about Congress, but support their Congress man or woman. “Throw the bums out,” they say, “except my Representative.” With fewer and fewer actual competitive races for Congress, it is harder and harder to see a change in the polarization that does not originate from local districts.
I don’t expect much because of the election, but what do you foresee will be the primary issues before Congress next year?
The answer to this all depends on what happens in the fourth quarter of this year.
Tax reform has been expected for months, and if Chairman Camp and Chairman Baucus unveil a plan in the later part of this year, there will be plenty of political momentum behind it.
In the wake of the Water Resources Reform and Development Act, Transportation and Infrastructure Committee Ranking Member Nick Rahall (D-W.Va.) and Water Resources Subcommittee Ranking Member Tim Bishop (D-N.Y.) have expressed that they have been promised by Chairman Bill Shuster (R-Pa.) that water infrastructure financing will be addressed. This could take the form of a State Revolving Fund (SRF) reauthorization or a Water Infrastructure Financing Innovation Act (WIFIA).
We also expect another Highway Bill from the Transportation and Infrastructure Committee as the authorization passed in 2012 expires in the fall of 2014.
Immigration reform remains an issue with possibilities, though no one is sure what direction that will take, or if, in the wake of the government shutdown, it has the staying power to remain at the forefront until things settle down.
Undoubtedly, however, there will be an event within the next year that will move priorities in and out of the limelight of national politics. The election will shape a great deal of the agenda in both Houses as the majorities will try to give their members something positive to campaign on or ammunition against attacks from back home.
Will Brown is NUCA’s Government Relations Manager.
