From the desk of Regina Lindsey (December 2016)
In case you weren’t aware, there was an election recently, and regardless of whom you voted for at the top of the ticket, the down-ticket effects are historic.
The last time the Republican Party held this much power was 1928. In 2017, the Republicans will control the White House, have a majority in the Senate with 54 of the 100 seats, hold 247 of the 435 House seats, and control 31 of the 50 gubernatorial seats in the nation. However, since Republicans don’t have 60 seats in the Senate, they do not have the power to invoke the cloture rule and shut down a filibuster. Therefore, Democrats in the Senate have this tool at their disposal. Other than that, there is little excuse for Republicans to not prove their claims they are the party of business. So what does 2017 policymaking mean for Southeast Texas? Here are a few things the Chamber will monitor:
Before the “Comey bombshell” on the Friday prior to the election, most people thought rising health care premiums might be the October surprise of this year’s elections. As people were going to the polls, many Americans were receiving notice of double-digit increases in premiums. The Affordable Health Care Act (ACA) is popular among people with pre-existing conditions for obvious reasons, but one of the biggest challenges to the success of ACA was the fact that the young and healthy, needed to spread the risk, simply did not buy into the plan.
Since this is one of the Democrats’ signature achievements, Republicans lacking the super-majority in the Senate narrows the paths for “replace and repeal” that was the rallying cry during the campaign. However, a simple majority could repeal a number of revisions as part of a budget reconciliation bill – the same tactic used to pass ACA. Here are some possibilities:
Tax Exempt Health Savings Accounts (HSA) – The idea is that individuals regularly pay into their HSA nest eggs throughout their lives and withdraw from them for ordinary healthcare expenses. They would pair their HSAs with high-deductible insurance to cover catastrophic expenses. Critics of repeal say that HSAs wouldn’t help the 20 million people who are currently purchasing subsidized insurance plans. They’re unlikely to have money to put into a savings account, and they are paying too little in taxes to benefit from a tax deduction.
Transparency – New regulations could require hospitals and doctors to post their charges so that patients could shop around for healthcare. There has also been discussion on providing an avenue for patients to challenge charges over $500.
More affordable coverage – One reason premiums rose under the ACA was that insurers were required to cover a variety of preventive treatments, whether or not policyholders needed them. Conservatives argue that repealing the ACA could check premium growth by stopping this mandated coverage and letting market forces determine demand. Another idea being floated is to allow income tax deductions for health insurance premiums. While companies that buy insurance for their employees currently get tax breaks, people who buy their own insurance do not. However, the premium-reduction proposal cited most often by President-elect Trump on the campaign trail would let insurers sell coverage across states lines, although some policy experts have scoffed at this proposal.
Over the past year, I’ve witnessed first-hand how regulations can slow expansion efforts. I think it is safe to assume there will now be changes, but the question remains how far-reaching will reforms be?
Earlier this year, Congress passed the Separation of Powers Restoration Act to limit federal agencies’ rulemaking power. The bill would overturn the 1984 Supreme Court decision that created “Chevron deference” – a legal precedent that says courts must defer to agency interpretations of “ambiguous” statutes when disputes arise, unless the interpretation is unreasonable.
But with less than 10 weeks until Inauguration Day, the EPA is looking to finalize last minute regulations on oil and gas. The head of the EPA has issued a memo charging staff to quickly finish up the last round of regulations before Trump enters the Oval Office next year.
In October, Trump released an action plan for his first 100 days in office that includes a requirement that for every new regulation issued, two existing rules must be eliminated. It’s a proposal some Republicans say they could get behind.
It is also important to note that U.S. District Judge Amos Mazzant ruled that the recent Overtime Rule that would give mandatory overtime pay to workers making less than $47,500 a year is unlawful and granted a motion for a nationwide injunction.
The Labor Department said it “strongly disagreed” with the decision and is considering an appeal.
Upon Congressman Kevin Brady’s ascension to chair of Ways and Means, he immediately undertook a simplification of the tax code that almost as quickly met its demise when it became clear that even if passed by both houses, President Obama would veto it.
With the most recent election, this idea has gained new legs. However, it has its own set of challenges between the two congressional chambers.
Sen. John Cornyn has publicly stated that one of the lessons Republicans should take away from the “Obama” years is the need for bipartisan crafting of major overhauls such as this, but the House and Senate may not exactly be on the same page in how to accomplish this. Trump, House Speaker Paul D. Ryan and Senate Majority Leader Mitch McConnell all say they want to cut taxes for individuals and lower rates that businesses pay to make U.S. companies more competitive with international rivals.
Trump and Ryan have released relatively similar tax proposals loaded with ideas backed by conservative Washington think tanks, but Senate Republicans have yet to be as specific about the policies they want to pursue. They don’t agree on all of the elements of the House blueprint and insist an effort needs to be made to recruit some Democratic support.
One difference between the two chambers could be over how to address tax policy for multinationals. In the past, Senate Finance Committee Chairman Orrin Hatch has favored a more traditional form of international tax strategy that would tax companies only on the profits they earn in the U.S. and not tax profits earned abroad. That conflicts with Brady’s blueprint, which embraces new border adjustments for taxing multinational corporations that some experts say could violate World Trade Organization rules. The House GOP blueprint outlines many long-held Republican principles, such as cutting rates for businesses and individuals and ending many personal deductions, without filling in critical details about which programs would be eliminated to make up for the huge cost of cutting tax rates.
Analysts at the Tax Policy Center estimate that the House GOP plan would cost the federal government more than $3 trillion over 10 years. Republicans insist their plan will raise that much or more through increased economic activity. Most economists, however, have long dismissed the idea that the growth spurred by tax cuts will generate enough offsetting revenue.
Trump has issued a 200-day plan built around five main principles, plus an extra plank on manufacturing jobs: renegotiating or withdrawing from NAFTA, stopping the Trans-Pacific Partnership deal, stopping “unfair imports,” ending “unfair trade practices,” and pursuing bilateral trade deals. The last, to “retain and return manufacturing jobs,” focuses on lowering the business tax rate and eliminating regulations on businesses and restrictions on domestic energy.
On Day 1, Trump would begin reforming NAFTA, including ordering the Commerce Department and International Trade Commission to begin a study on the ramifications of withdrawing from the treaty and the legislative requirements to do so. He would also have the U.S. trade representative notify Mexico and Canada that the U.S. intends to propose some amendments to the treaty, which could include measures on currency manipulation, lumber, country of origin labeling, and environmental and safety standards.
Trump would also submit legislation on currency manipulation, review whether our trading partners engage in “harmful” practices, and would order the Committee on Foreign Investment in the U.S. to review food security in trade and reciprocity in international corporate takeovers (i.e., whether a U.S. company would be able to buy a Chinese company like a Chinese company would be able to be buy a U.S. company).
By Day 100, the plan says, Trump would continue NAFTA renegotiations, would pursue cracking down on China by seeing if they could be labeled a currency manipulator and through bilateral trade negotiations. He would also bring the intelligence community into the trade world.
By Day 200, Trump would be considering formally withdrawing from NAFTA and continuing to pursue bilateral trade agreements with Canada and Mexico. The document notes that Congress has granted the president Trade Promotion Authority — power for the president to get trade deals through Congress more swiftly — until 2018, and it could be extended until 2021. The memo notes caveats, including that there could be negative consequences of withdrawing from NAFTA.
What hasn’t been discussed is Trump’s view on trade agreements with the European Union or with the UK, a major market for Southeast Texas, in the aftermath of Brexit.
I have to admit this is the area of most concern to me, considering the large exporting base in our economy. If we end up with better deals, that’s one thing, but I’m wary of the ramifications for our local economy if the paradigm shifts to a truly isolationist one.
The company that owns the Keystone XL pipeline said it was interested in finishing out the project. The pipeline was originally planned to carry oil from the tar sands of Canada to the Texas Gulf Coast, but the part linking up the pipe on the U.S. border with Canada was stopped by President Obama. President-elect Trump has said he is in favor of the pipeline, and invited TransCanada to reapply for approval as part of his platform. Senate Majority Leader Mitch McConnell has asked President-elect Donald Trump to prioritize approving the Keystone XL pipeline.
Congress passed the first major multi-year, substantial spending transportation bill last December. Trump has said he’d like to see the federal government spend another $1 trillion on roads, airports, pipelines and the electrical grid. He has also indicated he supports mass transit and high-speed rail, which could be beneficial to Texas’ project connecting Houston to Dallas. To pay for the plan, Trump points to efforts in tax reform to capture overseas profits of American business and a tax-credit plan intended to attract private investment in revenue-producing infrastructure projects. He argues that $167 billion in government-funded equity, along with large tax credits, would be enough to attract the $1 trillion from private investors. Those tax credits would be repaid by additional tax revenue created by the projects, including from income taxes generated by job growth and corporate taxes on contractor profits. According to his math, that would make the program revenue-neutral. But Republicans, who typically have difficulty supporting major transportations bills, are skeptical, and McConell has already said transportation is low on his priority list.