Washington, DC, Policy and Political Update

Transcription

1 July 12, 2017 Washington, DC, Policy and Political Update Andrew Shaw, Senior Managing Associate D andrew.shaw@dentons.com

2 Outline of Presentation Political Climate Health Care Tax Infrastructure Trade Energy and Environmental Q&A 2

3 Political Climate Anger, division, and uncertainty persists after 2016 election 3

4 Trump s approval ratings are lower than previous presidents at this point in his first term Historical presidential approval ratings (Days in office) President Approval Rating days in office Highest approval rating Lowest approval rating Average approval rating Approval at end of final term Donald Trump 38% 5/15-5/21/17 45% 38% 41% - Barack Obama 64% 5/18-5/24/09 67% 40% 48% 52% George W. Bush 56% 5/18-5/20/01 90% 25% 49% 29% Bill Clinton 44% 5/21-5/23/93 73% 37% 55% 62% George H.W. Bush 63% 5/15-5/18/89 61% 29% 89% 43% Ronald Reagan 59% 6/5-6/8/81 68% 35% 53% 61% Jimmy Carter 64% 5/20-5/22/77 75% 28% 46% 31% Source: Gallup,

5 The Freedom Caucus holds enough votes to disrupt the Republican majority House makeup by caucus membership Freedom Caucus Progressive Caucus Moderate Republicans Moderate Democrats Tuesday Group Blue Dog Coalition 218 votes for majority House Republican Conference 241 Freedom Caucus 30* Tuesday Group 50* Republican Study Committee 170* Republican Main Street Partnership 65* House Democratic Caucus 194 Blue Dog Coalition 17 New Democrat Coalition 61 Progressive Caucus 70 Vacancies 0 Whip stats Republicans hold a 47-seat lead A majority requires 218 votes (if all members cast a ballot) If Republicans lose all Freedom Caucus votes, they require 7 centrist Democratic votes to form a majority *Estimated caucus size; rosters have not been finalized and published for the 115 th Congress. The House Freedom Caucus does not publish its member list. Sources: National Journal Research,

6 The legislative agenda for 2017 Key dates and prospective items on the legislative agenda in 115 th Congress Jan Feb Mar April May June July Aug Sep Oct Nov Dec Beginning of 115 th Congress Presidential inauguration ACA: End of open enroll. period DNC chair election Approps: Deadline to pass a new CR Trump s 100 th day in office G7 meeting SCOTUS term ends G20 summit Immigration: partial travel ban goes into effect Congress on summer recess NAFTA renegotiations commence FAA authorization expires National Flood Insurance Program authorization ends CHIP authorization expires Beginning on FY 2018 CBO projects extraordinary measures will be exhausted Possible actions, timing unknown Affordable Care Act: After the AHCA passed the House, the Senate is working on their own bill with a vote possible in July Conflict in Iraq & Syria: Democrats have renewed efforts to reign in executive military actions through a new Authorization for the Use of Military Force (AUMF) Debt Ceiling: Congress will need to raise the debt ceiling before October; potential action possible in July. Energy & Environment: Senate may vote on a comprehensive energy bill in July Financial Regulation: Last month, the House passed the CHOICE Act, which would replace the Dodd-Frank bill, but the Senate is unlikely to consider it Immigration: The Supreme Court has agreed to weigh in on Trump s travel ban Russian Sanctions: Last month, the Senate overwhelmingly passed a Russian sanctions bill, but the energy sector is urging changes to the bill in the House Tech: The Trump administration is working to modernize government information technology systems, while leadership in Congress has been involved in efforts to expand broadband and supplement the FCC's effort to roll back net neutrality regulations Sources: National Journal Research,

7 Despite losing special elections, Democrats have been exceeding expectations Special House elections: 2017 vs Partisan Voting Index, The Cook Political Report District District PVI PVI-expected Dem. vote Actual Dem. vote Democratic overperformance Kansas 4th Georgia 6th Montana AL South Carolina 5th GOP th most conservative 362 nd most liberal GOP th most conservative 271 st most liberal GOP th most conservative 308 th most liberal GOP th most conservative 292 nd most liberal 35% 47% +12% 42% 48% +6% 39% 47% +8% 41% 48% +7% Partisan Voter Index is the deviation from the national average; a PVI of GOP +15 means that the district tends to vote 15 points more for Republicans than the nation as a whole Based on PVI, the Cook Political Report has estimated the expected percent of the vote a Democrat would receive in a generic election in each district If Democrats outperform their PVI-expected scores by 8 points across the board in 2018, they would pick up 80 seats Sources: National Journal research; David Wasserman, ^A-06: Why Handel win isn t a disaster for Democrats, The Cook Political Report, June 21,

8 Health Care Can Republicans "repeal and replace" the ACA or will a bipartisan solution arise? 8

9 Senate health care bill would benefit the wealthy and cut public health funding for the most vulnerable Winners and losers in the Better Care Reconciliation Act The winners Wealthy individuals: BCRA gets rid of an investment income ACA tax on wealthy individuals making more than $250,000 a year Healthy individuals: The BCRA focuses on driving down premiums by scaling back protections for the sick States can choose to not offer substance abuse treatment by providing simple and cheap plans for the healthy GOP governors: BCRA gives states greater say over their health coverage plans It rolls back mandatory coverage and expedites the process for states to apply for waivers Health insurers, medical device companies: BCRA repeals ACA tax on medical devices, tanning salons and health insurance groups Health insurance groups are still considering their position on the bill The losers Poor, sick & older individuals: Medicaid rollback will leave many older and poorer people without insurance States could apply for waivers that exempt insurance providers from protecting essential health benefits Planned Parenthood recipients BCRA would cut Planned Parenthood funding for a year 40% of PP funds come from the federal government, which could lead to number of clinics closing Individuals struggling with addiction: Senate bill only provides $2 billion in funding for opioid treatment, while the House bill provided $15 billion over 10 years Public health funding: BCRA cuts the Public Health Fund by $1 billion a year sooner than the House bill CDC and NIH are expected to see a 12% decrease in funding for public health crises like Zika and other outbreaks Sources: Politico, June 23,

10 Senate Republican opposition to BCRA spans ideological spectrum Moderate Rs Conservative Rs Establishment Rs Sen. Susan Collins (ME) Sen. Ted Cruz (TX) Sen. Jerry Moran (KS) Sen. Shelly Moore Capito (WV) Sen. Mike Lee (UT) Sen. John Hoeven (ND) Sen. Rob Portman (OH) Sen. Rand Paul (KY) Sen. Ron Johnson (WI) * An additional 4 Republican Senators have expressed significant concerns with the BCRA ** Senate Majority Leader Mitch McConnell (KY) can only afford to lose two Republicans & pass the BCRA assuming, as expected, that no Senate Democrats support the bill 10

11 Options for Senate Health Care Legislation "Cruz Amendment" * Amendment would allow individual insurance markets to offer plans that do not meet EHB and Community Ratings regulations, provided that at least 1 plan in the market meets these requirements * The intent of the amendment is to lower costs of individual health care plans but removing ACA protections could alienate moderate Senate Rs Increased Funding for Medicare and Opioid Treatment * Reduce levels of cuts in BCRA to Medicare and opioid programs to sway moderate Senate Rs Bipartisan Fix * McConnell recently stated that he would need to work with Democrats to stabilize the individual markets if the BCRA fails Repeal Only * The President recently tweeted that Congress should pass repeal the ACA if efforts to "repeal and replace" the law fail * While some conservatives support a repeal-only approach, Congress is unlikely to support this type of legislation. 11

12 Tax Reform Comprehensive Reform or Tax Cutsonly legislation? 12

13 Options for Tax Legislation House Republican Tax Blueprint * Blueprint would impose a border adjustment tax (BAT) on imports to help offset the cost of significant reductions in corporate and individual rates * BAT, however, has evoked significant opposition from various business sectors (e.g, energy, retail) and some Republican lawmakers President's Tax Blueprint * On April 26, White House released 1-page tax outline, which would reduce the individual brackets from seven to three, repeal the AMT and Estate Tax, and maintain housing and charitable deductions * The White House outline would reduce corporate rates to 15%, establish a territorial system and impose a one-time repatriation tax to potentially fund an infrastructure bill Senate Action * Senate Finance Committee Chairman Orrin Hatch has appointed working groups to provide solutions on various parts of the tax code * Hatch is also soliciting comments from stakeholders on tax reform Key Question -- if comprehensive reform fails, will Congress pass a tax cuts-only bill? 13

14 Infrastructure Hope for a bipartisan consensus fades 14

15 President's Infrastructure Plan During its recent "Infrastructure Week", the White House revealed more details on the President's $1 trillion infrastructure plan * $200 billion in direct federal infrastructure funding * Reducing the permit processing time by eight years * $25 billion for rural infrastructure * $15 billion for "transformative projects" * $100 billion for local prioritization of infrastructure needs * 1 million apprentices 15

16 Trump's proposed FY 18 DOT program cuts complicate push for infrastructure compromise Cuts to Department of Transportation programs Program name Justification provided 2018 request YoY percent change Capital Investment Grants (New Starts) Essential Air Service Amtrak grants National Infrastructure Investments (TIGER grants) Localities are better equipped to scale and design infrastructure investments needed for their communities. Several metropolitan areas have already begun to move in this direction by asking residents to approve multi-billion dollar bond measures to speed the delivery of highway and transit investments. The EAS program was originally established as a temporary program nearly 40 years ago to provide subsidized commercial air service to rural airports. Many EAS flights are not full and have high subsidy costs per passenger. Attempts at incrementally reforming the program have not resulted in much change in the cost of EAS. The Administration is proposing a wholesale redesign of the program, to eliminate the discretionary component of the program and focus the remaining resources on those remote communities in most need of support. Amtrak's long distance trains do not serve a vital transportation purpose, and are a vestige of when train service was the only viable transcontinental transportation option. Today communities are served by an expansive aviation, interstate highway, and intercity bus network. The remaining Federal funds for Amtrak are dedicated to Amtrak's Northeast Corridor (NEC) and State-Supported services, which do provide real transportation alternatives for regions. This program began as part of the 2009 stimulus bill and has not been authorized under the last two multi-year surface transportation authorization acts. It provides Federal funding for projects with localized benefits, and often these projects do not rise to the level of national or regional significance. $1.2 billion 43% $0 100% $774 million 45% $0 100% Sources: Office of Management and Budget, A new foundation for American greatness, May 23,

17 Trade Policy President rejects prior administrations' support for free trade 17

18 Trump's Major Trade Actions NAFTA Renegotiation * Instead of withdrawing from NAFTA, the President is pledging to renegotiate the agreement w/canada & Mexico * President wants to stabilize bilateral trade deficits w/canada & Mexico; others are looking to strengthen environmental, labor, etc. provisions * Formal negotiations expected to commence after statutory 90-day notification period ends in mid-august Section 232 Investigations * Trump administration has initiated investigations into whether aluminum & steel imports imperil national security; the results of these investigations could trigger import duties and/or quotas * These 232 studies are ostensibly targeted at Chinese dumping of aluminum & steel, but Canada, Germany and other allies are raising concerns about impact of potential US duties or quotas Bilateral Trade Agreements * Instead of large trade agreements, the President has expressed a desire to negotiate bilateral trade agreements, such as with Japan and the UK 18

19 Recent Canadian actions on dairy have provoked bipartisan calls for retaliation Canada s supply management system presents challenges for US producers Administration talking points Trump views NAFTA as a bad deal for the United States He has placed tariffs on Canadian softwood lumber He announced plans to renegotiate NAFTA after his staff prepared an order to officially withdrawal Trump won the 2016 election by narrowly winning important dairy states: WI, MI, and PA Support for action from Dems Democrats who support action by the Trump administration against Canada Sen. Al Franken (D-MN) Sen. Amy Klobuchar (D-MN) Rep. Collin Peterson (D-MN07) Rep. Tim Walz (D-MN01) Senate Minority Leader Schumer (D-NY) Senate Ag Committee Ranking Member Debbie Stabenow (D-MI) Sen. Kirsten Gillibrand (D-NY) Analysis American dairy producers argue that Canada s supply management system has created unfair prices for ultrafiltered milk Canadian dairy has some exemptions under NAFTA, which may be non-negotiable in upcoming talks The dairy market is currently dealing with a major surplus, hurting dairy farmers Canada imports $413 billion in US dairy products annually Sources: Caitlin Dewey, President Trump's sudden preoccupation with milk, explained, Chicago Tribune, April 25, Nicole Gaudino, Schumer to help Trump fight Canadian dairy policy, USA Today, April 19, Office of Senator Al Franken. Josh Wingrove, John Micklethwait, and Jen Skerritt, Trudeau Defends Dairy Subsidies After Trump Vows U.S. Farmer Aid, Bloomberg, April 20,

20 Energy & Environmental Policy Trump Administration takes executive action to roll-back Obama's climate change legacy 20

21 Energy and environment Timeline of key recent federal actions on energy Dec. 12, 2016 Feb. 06, 2017 Feb. 14, 2017 Feb. 28, 2017 Mar. 13, 2017 Mar , 2017 The Water Resources Development Act (WRDA) becomes the Water Infrastructure Improvements for the Nation Act and is signed by President Obama. The new bill, which combines WRDA and other water infrastructure legislation, is signed into law H.J. Res. 38 to repeal the Stream Protection Rule is presented to the president. H.J. Res. 41 to repeal the SEC s rule requiring disclosure of payments made to foreign governments by resource extraction issuers is signed by the president. President Trump signs an executive order mandating a review of the Waters of the U.S. rule. The Trump administration presented a budget that would severely cut the funding for environmental and energy programs and completely eliminate others At the EPA, President Trump signs an executive order that would review environmental protections of the Clean Power Plan and rescind a moratorium on coal mining on federal lands, while on the Hill the next day, the House passes the HONEST Law, which would prohibit the EPA from using science that isn t publicly available. Potential actions in 115 th Congress The Senate could consider a bipartisan energy bill, which includes provisions relating to efficiency, hydropower, infrastructure and LNG, among other issues. The House is also working on individual bills that could be part of a stand-alone energy package or as an energy title to an infrastructure package. President Trump's FY 2018 budget request would drastically reduce funding across the Department of Energy and the Environmental Protection Agency, but Congress will likely reject many of these proposed cuts. Apr. 25, 2017 Apr. 27, 2017 June 1, 2017 June 1, 2017 President Trump signs an executive order mandating a review of all monuments designated under the Antiquities Act that are greater than 100,000 acres in size. An executive order on implementing an offshore energy strategy that encourages energy production and exploration in the Arctic and Atlantic oceans, including on the Outer Continental Shelf President Trump announces the withdrawal of the U.S. from the Paris Climate Agreement EPA announces new rules for the Toxic Substance Control Act that detail prioritization and risk evaluation rules Over the coming weeks and months, the Senate may consider the President's nominees for FERC and the NRC, along with deputy positions at DOE, EPA and Interior. There may be more focus on electricity market reform with the looming release of a DOE study on the electric grid. Sources: GovTrack.us, Timothy Cama, House votes to restrict EPA s use of science, The Hill, March 29, 2017; Dan Merica, What Trump s climate change order accomplishes and what it doesn t, CNN, March 29, 2017; Gregory Korte, The 62 agencies and programs Trump wants to eliminate, USA Today, March 16, 2017; Michael Greshko, A running list of how Trump is changing the environment, National Geographic, March 31,

22 Questions? 22

23 23 Thank you Dentons US LLP 1900 K Street, NW Washington, DC United States Dentons is the world's largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons' polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to provide legal advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for Legal Notices.