The 114th Congress will convene on Jan. 6. With Republicans strengthening their majority in the House and taking control of the Senate, what can we expect from the new congress?
Health Care Reform
The passage and implementation of the Affordable Care Act has resulted in dramatic political reverberations around Washington, D.C., and throughout the country. Look for Republicans to follow through on their promise to vote to repeal the Affordable Care Act. This is almost certain to be vetoed by President Obama. If the repeal effort fails, Republicans will move to reform portions of the act, such as repealing the medical device tax, addressing the disincentive to the 40-hour work-week and reforming the employer mandate.
All of these proposals have bi-partisan support. In addition, the Supreme Court will hear a case in March to decide if health care subsidies are legal in states that do not have their own health insurance exchanges. Even with the promise of federal government subsidies, only 16 states set up their own exchanges. The outcome of this decision will have a large impact on the funding mechanism for the Affordable Care Act and for those states, such as Idaho, which set up their own state-based exchanges.
Because of outdated federal tax policy, our country is in need of fundamental tax reform from Congress. Senate Finance Committee Chair Orrin Hatch (R-UT) and House Ways and Means Chair Paul Ryan (R-WI) will be in the forefront of tax reform. They have both stated that an overhaul of the tax code is long overdue.
One area that could receive significant attention is corporate inversions. This is the process used in the case of Burger King moving its headquarters to Canada. Critics of this practice argue that it is a manipulation of the tax system, but others argue that it is necessary due to high corporate tax rates in the United States. Other pressing tax issues will involve the taxation of internet sales and developing a long term plan for infrastructure funding in the US.
Approval of the Keystone XL pipeline became a major issue during the 2014 election season, with Louisiana Sen. Mary Landrieu sponsoring a bill attempting to push the issue through Congress. However, the bill was not able to gain enough Democratic support to pass out of the Senate with a 60-vote majority and was thus withdrawn. Incoming Senate Majority Leader Mitch McConnell (R-KY) has said that passing a bill to authorize the pipeline is one of his top priorities in the new Congress. Republicans appear to have the votes lined up to pass the measure, but President Obama has resisted it in the past. Also, expect the new Republican controlled Congress to use its oversight mechanism to lean on the EPA and Clean Air Act and to lower restrictions on exporting of U.S. oil and energy products.
While there has been a lot of discussion about the Affordable Care Act over the past few years, the lesser known Dodd-Frank Wall Street Reform and Consumer Protection Act will see increased attention from the new Congress. An early sign of this was the insertion of language that loosens restrictions of large banks dealing in financial derivatives in the recent continuing resolution bill.
Expect attempts to change the structure and funding of the Consumer Financial Protection Bureau and to exert greater control over the operations of the Federal Reserve. There is increasing bipartisan support to change the way banks are designated as “too big to fail”. This would allow the regulators to increase their focus on the riskiest institutions instead of on traditional banks. President Obama and many Senate Democrats, led by Senator Elizabeth Warren, are opposed to altering Dodd-Frank, so it will be interesting to see if Republicans are able to make substantive changes to the four-year-old law.