The Policy Road Ahead: Post-Election

10 November 2008 Publication
Author(s): Theodore H. Bornstein

Public Affairs News Alert

The 2008 presidential campaign provided the voters with a real choice on policy on a wide variety of issues. President-elect Obama now has the challenge of creating an agenda based upon those campaign promises and the diverse philosophy of his coalition in the toughest economic environment that any modern day incoming president has faced.

Control of the next Congress is now firmly in the hands of the Democrats. And, with six solid Democratic Senate pick-ups, even if the outcome of the three undecided Senate races all are decided for the Republicans, the reality is that on many issues the Senate will be close to filibuster-proof. However, even with the increased numbers, the plans of congressional Democrats will still have to face a determined GOP minority in the Senate that may be able to summon up enough votes to block legislation. As a result, congressional Democratic leaders were very careful in their post-election comments to rein in voters’ expectations for immediate changes in policy, and signaled that they will focus their initial efforts upon engendering greater “civility” and further “fiscal responsibility.” In the short-term, Congress also is likely to take up additional economic stimulus legislation during the upcoming November lame-duck session and possibly also after the 111th Congress begins next year. Congress also will look at revisiting the fiscal year 2009 appropriations passed in September 2008 and look to adjust the spending levels and priorities.

From taxes to new regulations, alternative energy opportunities to health care reform, and the Employee Free Choice Act, which has already passed in the House and would make it much easier for unions to organize employees, companies are going to face many issues in the next two years that will have a major impact on their bottom-line profits. Understanding the impact of the potential legislation, advocating for the changes needed, and interpreting the outcomes will require an aggressive focus on government affairs and strategic engagement with key members and staff.

The Foley Government & Public Affairs Practice has delved into President-elect Obama’s campaign policy proposals on four basic issues: taxes and fiscal policy, energy and environment, health care, and trade. This report is the result of our combined team of attorneys, lobbyists, researchers, and strategic counselors.

Taxes and Fiscal Policy
The 2008 presidential election was greatly affected by the two campaigns’ respective economic programs. The economic crisis in the financial world — with the passage of a $700 billion rescue package for the nation’s financial sector, the slumping housing market, and rising consumer prices for food, fuel, and services — has kept the state of the economy the voters’ top concern (51 percent) according to an October 23, 2008 ABC News/Washington Post poll. Concerns about the economy have only increased during the intervening weeks. In a post-election exit poll conducted by CNN, President-elect Obama won voters who named the economy as the top issue (63 percent) by a margin of 53 percent to 44 percent. This result echoes the findings of pre-election poll on which candidate respondents trusted more to handle the economy (Mr. Obama at 56 percent versus Sen. John McCain at 38 percent). This importance of the issue helped the Obama campaign greatly and eroded support for Sen. McCain.

President-elect Obama supports a middle-class tax cut paid for by raising individual taxes on wealthier Americans, raising taxes on big business by closing corporate tax loopholes, and raising the capital gains tax rates to 20 percent for individual filers making more than $250,000. He has expressed support for a second stimulus package calling for more than $100 billion of aid in the form of additional tax rebates and increased federal spending. Just prior to the election, President-elect Obama unveiled a new tax plan that would offer a $3,000 tax credit for each domestic job created in 2009 and 2010 by businesses. Also key for the next administration is the continued development and refinement of the financial markets rescue plan already underway. The markets will need assurances that the plan is still moving ahead after January 20, 2009.

The next major development for the transition will be President-elect Obama’s selection of his economic team, including nominees for U.S. Treasury Secretary and U.S. Housing and Urban Development Secretary, and key White House posts such as Chief of Staff and Chair of the Council of Economic Advisers.

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Energy and Environment
The increases in energy prices this year, together with the global climate change debate, placed energy as the third most important domestic issue affecting voters right after concerns about the overall economy and health care, according to an ABCNews/Washington Post poll released on October 23, 2008. In a post-election poll by CNN, President-elect Obama won voters who named energy as a major issue for their vote (seven percent) by a margin of 50 percent to 46 percent.

President-elect Obama has campaigned on his support for greater alternative energy productionto help reduce the effect of high oil prices on the nation, higher fuel-economy standards on new cars and trucks, and new mandates on power companies to use solar and wind power to generate 10 percent of their power by 2012. Mr. Obama also has embraced a congressional bipartisan plan that would approve some limited offshore drilling off the Southeast while cutting tax breaks for oil companies. However, comments by President-elect Obama and Vice President-elect Joe Biden on the future of coal energy have raised concerns about how this industry will fare under the new administration’s likely new environmental mandates.

In the area of environmental policy and the global climate change debate, Mr. Obama and Mr. McCain both recognize the need for policy changes to address the issue but differ on the proper way to reduce man-made emissions. Both men supported Senate legislation to cut U.S. emissions of greenhouse gases by capping industrial pollutants and allowing companies to buy and sell emissions permits. But President-elect Obama has proposed a wide range of proposed federal mandates and tax incentives that seek to break the nation’s reliance on fossil fuels.

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Health Care
One perennial issue in each of the last four presidential elections has been the issue of health care. Concerns persist about the increasing costs of health care, the millions of uninsured Americans, and the role of the government versus the private sector. According to an October 23, 2008 ABCNews/Washington Post poll, health care was the second most important domestic policy issue affecting voters’ choice for president after the economy. In a post-election poll by CNN, President-elect Barack Obama won voters who named health care as a major issue for their vote (nine percent) by a margin of 73 percent to 26 percent.

President-elect Obama has proposed the creation of a national health insurance exchange to help individuals and businesses buy into either a government or a private health plan. He also would expand eligibility for Medicaid and the State Children's Health Insurance Program (SCHIP), and he also has proposed requiring parents to buy health insurance for their children. Finally, he would require employers to offer health insurance to their workers or instead make a "meaningful" contribution to their employees' coverage, and would impose new nationwide rules on insurers to prohibit the rejection of applicants because of illness or pre-existing conditions.

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While trade policy was a major concern during both the Democratic and Republican primary campaigns, most observers do not expect to see the issue rise beyond second-tier consideration for voters. Yet, given the importance of trade to the nation and the world, changes in trade policy could affect both the kitchen table and the boardroom alike.

President-elect Obama has promised to improve labor and environmental standards in trade agreements. During the primary campaign, he signaled a willingness to revise existing pacts such as the North American Free Trade Agreement (NAFTA) and enforcement and not necessarily on negotiating new trade pacts. The Obama campaign has now revised its NAFTA stance and is promoting a less confrontational message emphasizing domestic improvements in health care, education, and job retraining aimed at allaying Americans' anxieties about their job security and threats from trade.

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Public Affairs News Alert is part of our ongoing commitment to providing up-to-the minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Ladonna Y. Lee
Washington, D.C.

Theodore H. Bornstein
Washington, D.C.

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