The Policy Road Ahead: Post-Election Congressional Session Update

The one-week “lame-duck” session of the 110^th U.S. Congress recently wrapped up after the passage of a narrow bill extending unemployment benefits, but without passing any rescue legislation related to the automotive industry or an economic stimulus bill. Congressional leaders failed to advance new legislation and, instead, will likely come back to Washington, D.C. after Thanksgiving to address a proposal for a $25-billion deal to aid the troubled domestic automotive industry. Absent a change in attitudes on the Hill, Congress will delay consideration of a stimulus package and additional spending bills until the opening weeks of the next Congress in January 2009, prior to the inauguration of President-elect Barack H. Obama on January 20, 2009. The Democrats will hold larger majorities in both the U.S. House of Representatives and the U.S. Senate and, pending the outcome of a recount in Minnesota and a runoff election in Georgia, could reach 60 seats in the Senate, which would help them overturn Republican filibusters.

However, during this period, key members of Congress introduced several legislative proposals that will help frame the debate on health care, climate change, energy, and economic stimulus during the first 100 days of the Obama presidency. One area of interest will be a series of new appropriations bills for the 2009 fiscal year. Currently, the government is operating under a continuing resolution that is funding 10 departments at a rate commensurate with their current spending levels. The Democratic leadership would like to increase spending and rework some of their priorities for the rest of 2009 and will have an opportunity to do so after President George W. Bush leaves office.

While the elected leaders for both parties in both chambers have won re-election, there are a few small changes in some key lower-level offices. There also will be a number of significant changes on both sides of Capitol Hill with new chairmen at several committees, including the U.S. Senate Committee on Appropriations, U.S. Senate Committee on Commerce, Science & Transportation, the House Committee on Energy and Commerce, and the House Committee on Oversight and Government Reform.

Legislative Update

President Bush Signs Unemployment Extension Bill
On November 21, 2008, President Bush signed a bill extending unemployment benefits that would provide up to 13 more weeks of benefits for people whose benefits have expired. HR 6867 would provide an additional seven weeks of extended unemployment benefits in every state, plus another 13 weeks in states where the unemployment rate has averaged six percent or higher over the most recent three months. The Senate passed the bill, which will cost $6.1 billion in fiscal 2009, on November 20, 2008 during its lame-duck session. In early October 2008, the House passed the bill on an overwhelming bi-partisan vote of 368-28.

Second Stimulus
The effort to pass a stimulus package in the lame-duck session failed after it was clear that even a slimmed-down package would have trouble clearing the Senate, and the bicameral congressional Democratic leadership decided that they would rather try to craft a larger package after the new Congress begins in January 2009. Shortly after the election, Democratic leaders had again suggested that a second stimulus package could come up in the lame-duck session in mid-November 2008. The package, ranging from $100 billion to $300 billion in various iterations, would have been focused primarily on spending for Medicaid, infrastructure, food stamps, and unemployment insurance. As the problems in the automobile industry became more pronounced, congressional leaders began to call for more assistance for the Big Three automakers as part of the package. However, talks with the White House showed that this was a non-starter, and the decision was made to look ahead to new efforts in January 2009. Rahm Emanuel, the President-elect’s Chief of Staff, has been quoted in news as saying that a stimulus plan would be Mr. Obama’s “first order of business” after his inauguration.

After Congress left town for Thanksgiving, a number of key Democrats offered their views of what a second stimulus package might look like. House Speaker Nancy Pelosi (D-Calif.) said on November 23, 2008, that Congress could put together an economic stimulus package of several hundred billion dollars that also should contain tax cuts. Advisors to President-elect Obama said that they are envisioning a package of around $500 billion, which would combine new spending with additional tax cuts. In another interview, Sen. Charles E. Schumer (D-N.Y.) mentioned that such a package could be as much as $700 billion. These packages would be put together in the next few weeks so that Congress could pass the bill in early January and President-elect Obama would be able to sign it after he takes office. It is unclear what will be in the stimulus package, but news reports indicate President-elect Obama’s team is assembling a massive jobs program that would combine new funding for public-works projects and development of green technology and alternative-energy sources with targeted tax cuts.

One element that could play a role in the second stimulus package is the fate of the United States-Colombia Free Trade Agreement (FTA). It is a priority for President Bush to ratify this pact prior to leaving office. There was a report prior to the lame-duck session that approval of the FTA was necessary to get the president to sign any stimulus bill, but that was quickly denied by the White House. However, an outside chance still remains that the FTA and a stimulus bill could move during a second lame-duck session in December 2008.

Big Three Automotive Bailout
The other major legislative effort of the lame-duck session concerned the troubled automotive industry and that group’s efforts to secure additional taxpayer funding to help keep their current operations running. The automotive industry came under serious fire for its perceived failures over the last 30 years to meet consumer demands on quality, its burdensome labor contracts and pension obligations to former workers, and a general lack of direction in planning to return to profitability. Several prominent politicians even suggested that the automakers must go bankrupt first before any help would come from Washington. On November 20, 2008, as it seemed that no legislative package would be considered this year, a bipartisan group of key senators (Sens. Kit Bond (R-Mo.), Carl Levin (D-Mich.), and George Voinovich (R-Ohio)) had reached a compromise on a package that would borrow $25 billion for automaker liquidity from funds that Congress had previously approved for aiding the car industry in producing more fuel-efficient vehicles. House Speaker Pelosi said that the automakers would have until December 2, 2008 to present Congress with a comprehensive turnaround plan. Congress will meet the week of December 8, 2008 to consider aiding them, Senate Majority Leader Harry Reid (D-Nev.) told reporters later that day.

Despite talk about using the money for general aid to the Big Three automakers, at this time, the U.S. Department of Energy (DoE) is still on track to use the $25 billion to aid automakers and component manufacturers increase vehicle fuel efficiency. In fact, on December 3 and December 5, 2008, the DoE is hosting a question-and-answer session for automobile component manufacturers who wish to apply for loans under the $25 billion Advanced Technology Vehicles Manufacturing Incentive Program. The first application deadline is December 31, 2008, and deadlines thereafter will be quarterly until the loan money has been disbursed.

Recently, members of Foley’s Automotive Industry Team presented a seminar (http://www.foley.com/news/event_detail.aspx?eventid=2491) in our Detroit office on the effects of the auto industry crisis on the wide range of supplier organizations.

FY 2009 Omnibus Spending Bill
Congressional Democratic leadership will be crafting an omnibus fiscal 2009 spending bill in the first few weeks of January 2009 so the new president and the next Congress can quickly turn to a broader agenda. Prior to the beginning of the fiscal year on October 1, 2008, Congress passed a package that included three full-year bills — Defense, Military Construction-Veterans Affairs, and Homeland Security along with a continuing resolution that funded programs covered by the other nine bills at fiscal 2008 levels through March 6, 2009. Arguments over budget limits between Congress and President Bush prevented Democrats from spending as much as they planned, as these bills would have been vetoed. However, with President-elect Obama taking office, they are now ready to push for the additional spending in the omnibus, which has been estimated at $24.5 billion for the remaining bills. The unfinished appropriations bills are Agriculture, Commerce-Justice-Science, Energy-Water, Financial Services, Interior-Environment, Labor-Health & Human Services-Education, Legislative Branch, State-Foreign Operations, and Transportation-Housing & Urban Development.

Leadership Changes

With a few notable exceptions, the leadership of both parties in the House and Senate stayed remarkably stable. House Speaker Pelosi and Majority Leader Rep. Steny Hoyer (D-Md.) as well as Senate Majority Leader Sen. Harry Reid will preside over their increased majorities in both chambers and will face off against House Minority Leader Rep. John Boehner (R-Ohio) and Senate Minority Leader Sen. Mitch McConnell (R-Ky.), respectively, for another two years.

A few changes further down in the leaderships were made and they are detailed below.

Rep. Larson Wins House Democratic Caucus Chair, Will Replace Departing Emanuel
Rep. John Larson (D-Conn.) won the election to succeed outgoing Rep. Rahm Emanuel (D-Ill.) as Chairman of the House Democratic Caucus for the 111^th Congress. Rep. Larson was elected to Congress in 1998 from the Hartford area and previously served as Vice Chair of the Caucus. Rep. Emanuel left Congress to serve as Chief of Staff to President-elect Obama.

Rep. Cantor Wins Nod as New House Republican Whip
Rep. Eric Cantor (R-Va.) won election as the new Republican Whip and will replace Rep. Roy Blunt (R-Mo.), who held the post since 2003. Rep. Cantor, who previously served as Deputy Whip under Rep. Blunt, was elected to Congress in 2000 from the Richmond area.

Rep. Pence Becomes New House Republican Conference Chairman
Rep. Mike Pence (R-Ind.) has been elected the new House Republican Conference Chairman, replacing Rep. Adam Putnam (R-Fla.) who held the post since 2007. Rep. Pence was elected to Congress in 2000 from an East Central Indiana district and is a former chairman of the Republican Study Committee, a group of conservative House Republicans.

Committee Changes

Sen. Inouye Succeeds Sen. Byrd as Senate Appropriations Chairman; Rockefeller to Commerce
Sen. Daniel Inouye (D-Hawaii) will be the new chairman of the Senate Appropriations Committee in the 111^th Congress, as current Chairman Sen. Robert Byrd (D-W.Va.) announced he will relinquish the gavel due to his advancing age. On November 10, 2008, Senate Majority Leader Harry Reid endorsed the new committee leadership. Sen. Byrd has had several medical issues over the past years, and the 90-year old senator announced on November 7, 2008 that he would not continue his chairmanship. Sen. Inouye, 86-years old, will step down as Chairman of Senate Committee on Commerce, Science, & Transportation, and that post will likely go to Sen. Jay Rockefeller (D-W.Va.), a 71-year old, five-term senator.

Sen. Lieberman Keeps Senate Homeland Security and Government Affairs Chairmanship
Sen. Joseph I. Lieberman (I-Conn.) was able to keep his chairmanship of the Senate Committee on Homeland Security and Government Affairs for the 111^th Congress, thanks to the support of the man who he campaigned against, President-elect Obama. In a vote of the Senate Democratic Caucus, Sen. Lieberman was re-elected to the post by a vote of 42-13, but the group did strip him of his chairmanship of Private Sector and Consumer Solutions to Global Warming and Wildlife Protection Subcommittee of the U.S. Senate Committee on Environment & Public Works. Sen. Lieberman also agreed to continue to caucus with the Democrats, helping to keep them within striking distance of 60 votes in 2009.

Rep. Waxman Defeats Rep. Dingell for House Energy and Commerce Chairmanship
Rep. Henry Waxman (D-Calif.) defeated long-time House Energy and Commerce Chairman John Dingell (D-Mich.) for the chairmanship of the panel on November 20, 2008. Democratic lawmakers for the 111^th Congress voted 137-122 to put Rep. Waxman, its second-ranking member, in charge of the powerful panel. This marked the second defeat in two days for the 27-term Michigan Democrat as the Democratic Steering and Policy Committee voted 25-22 to select Rep. Waxman as Chairman.

Reps. Towns and Cummings Eye Vacant House Oversight and Government Reform Chairmanship
With Rep. Waxman’s victory to chair the House Committee on Energy and Commerce, he leaves his current chairmanship of the House Committee on Oversight and Government Reform open. Two men are believed to be in contention for the seat. One is the second-ranking House member, Rep. Edolphus Towns (D-N.Y.), who has already declared his intention to succeed Rep. Waxman. The other Member is Rep. Elijah Cummings (D-Md.), who is said to be a close colleague of Rep. Waxman, but has not signaled a desire to take the position.

Policy Look Ahead

Sen. Baucus Health Care Proposal Launched
On November 12, 2008, Senate Finance Committee Chairman Max Baucus (D-Mont.) put down a marker when he released a detailed health care agenda intended to be the basis of future legislation. Sen. Baucus’ plan calls for an insurance coverage mandate for all individuals and provides for creation of a “health insurance exchange” marketplace for the uninsured to purchase coverage. Under the Baucus plan, those aged five to 64 years would be eligible to buy into Medicare and the State Children’s Health Insurance Program (SCHIP) would be expanded. The plan calls for a redesign of Medicare’s payment mechanisms to focus physician payments on quality of care and outcomes rather than volume of procedures. The plan also calls for increasing the number of primary care providers, tackling fraud and abuse in public health programs, widespread adoption of health information technology, and increased use of comparative effectiveness research.

Kennedy Committee Working Groups
Less than a week later, Sen. Edward Kennedy (D-Mass.) announced the formation of three working groups in his U.S. Senate Committee on Health, Education, Labor & Pensions (HELP) to help draw up health care legislation in the next Congress. According to a committee release, the working groups will focus on three specific areas: a group on prevention and public health chaired by Sen. Tom Harkin (D-Iowa), a second group, chaired by Sen. Barbara Mikulski (D-Md.) on health care quality, and a third group on insurance coverage chaired by Sen. Hillary Clinton (D-N.Y.). Sen. Kennedy and his Republican counterpart Sen. Mike Enzi (R-Wyo.) also will be meeting with Sen. Baucus and the Finance Committee ranking member Sen. Charles Grassley (R-Iowa) to explore health care reform legislation.

Another prominent voice on the health care debate will be House Ways and Means Health Subcommittee Chairman Rep. Fortney (Pete) Stark (D-Calif.), whose AmeriCare Health Care Act (HR 1841) would create additional coverage on the Medicare platform. The Stark bill, which he has updated each Congress based on the lessons learned since the 1994 Clinton health care plan debate, is not intended to be a rival to any new Obama administration plan, but instead will be a good guide to how this key committee chairman would decide on issues.

Bingaman Energy Proposal
Sen. Jeff Bingaman (D-N.M.), Chairman of the U.S. Senate Committee on Energy & Natural Resources, proposed a sweeping energy bill for the next Congress on November 17, 2008. The energy package he wants to develop will be broad-based with six areas of energy policy that he plans to address in the next Congress. His goals include:

• Adequately funding clean energy technologies such as carbon capture and storage
• Expanding energy efficiency programs such as a smart grid transmission system that could reduce electric power losses, in addition to higher building-efficiency standards
• Continuing to support conventional fuels, including nuclear power, as the bridge to a new generation of clean energy resources
• Providing more dollars for science and technological innovation
• Implementing tax code changes that are aimed at efficiency goals instead of being targeted to individual winners and losers
• Imposing stronger regulation of energy markets and greater transparency in energy trading
• Addressing global warming

Shortly thereafter, Sen. Bingaman indicated on November 20, 2008 that he will defer to the incoming administration’s lead in developing energy policy along its timeline.

Boucher/Dingell Climate Proposal
In October 2008, House Energy and Commerce Committee Chairman Rep. John Dingell (D-Mich.) and Air Quality Subcommittee Chairman Rep. Rick Boucher (D-Va.) released their draft of a climate change proposal, which would be their starting point on the debate in the 111^th Congress. The draft bill would cap emissions of greenhouse gases and set up a market-based program for businesses to trade emissions credits. This draft would be less aggressive in early years compared to a previous Senate version of the bill, and would require six-percent emission reductions by 2020 and would increase over subsequent years to require 80-percent reductions by 2050. The bill also proposes controversial limits on the ability of states to implement their own emissions caps and would preempt state motor vehicle emissions standards.

However, one of the major reasons cited for the successful campaign of Rep. Waxman to take the House Energy and Commerce Committee chairmanship was his differences with Rep. Dingell’s approach on the climate change issue. Rep. Waxman may choose to lead the committee in a more aggressive direction on climate change legislation in the next Congress.

Sussman Paper
Robert M. Sussman, a key environmental advisor to the Obama campaign, published a paper on November 7, 2008 that criticizes key pieces of the Boucher/Dingell legislation, noting it raises “serious concerns and should not be the starting point for legislative action in the new Congress.” The former U.S. Environmental Protection Agency (EPA) Deputy Administrator during the Clinton presidency published the article through the Center for American Progress where he is a senior fellow. While Mr. Sussman is a co-chair of Obama’s EPA transition team, it was noted that his comments did not reflect an official position of the president-elect or his administration.

President-Elect Obama Comments
President-elect Obama weighed in on the climate change issue briefly on November 18, 2008. In a four-minute taped address to a gathering of the nation’s governors, he called for “urgent action” on the issue and repeated his campaign’s plans to implement legislation to reduce climate-altering carbon dioxide emissions by 80 percent by 2050, and to invest $150 billion in new energy-saving technologies. President-elect Obama has said that his plans would reduce oil imports, create new green jobs for Americans, and reverse the effects of global warming.

Boxer Bill
In the Senate, a veteran of the climate change debate is planning to take the issue on again with a slimmer bill. Senate Environment and Public Works Committee Chairman Sen. Barbara Boxer (D-Calif.) announced on November 20, 2008 that she will introduce a streamlined version of the climate change bill that failed in the Senate last summer. Sen. Boxer noted that the Warner/Lieberman bill was too complex but she did not regret the decision to bring it to the floor. She did not, however, describe how she would trim the bill. The previous bill would have sold and distributed emissions permits to industry and directed trillions of dollars a year to a series of industry and government programs. After a week of debate in June 2008, supporters failed to gather the 60 votes required to limit floor debate and the bill was shelved. Sen. Boxer also plans to introduce two global warming bills in the next Congress.

Finally, the House Select Committee for Energy Independence and Global Warming will continue to operate in the 111^th Congress and will continue to raise the profile of global warming and energy solutions. The committee also issued its end of session report on November 21, 2008 at the same time as House Speaker Pelosi reauthorized the panel for another Congress.

Obama Administration Transition

President-Elect Obama Names Economic Team
President-elect Obama named the members of his economic team at a November 24, 2008 press conference:

• Timothy F. Geithner, President of the New York Federal Reserve Bank, for Secretary of the TreasuryLawrence H. Summers, a former Clinton Treasury Secretary, as the Director of the National Economic Council
• Christina D. Romer, a University of California-Berkeley Professor, as the Chair of the White House Council of Economic Advisers

Both Mr. Geithner and Ms. Romer will have to be confirmed by the Senate, while Mr. Summers is a presidential appointment.

Peter R. Orszag to Lead Office of Management and Budget
On November 25, 2008, Mr. Obama announced that he will name Peter R. Orszag, the Director of the Congressional Budget Office and a former Clinton economic adviser, as the Director of the Office of Management and Budget.

Former Sen. Daschle to Lead U.S. Department of Health and Human Services
Former Senate Majority Leader Tom Daschle (D-S.D.) has accepted the position of Secretary of Health and Human Services and will play a major role in passing a health care bill through Congress, according to senior Democratic officials. Elected to the House of Representatives in 1978, Mr. Daschle served four terms before being elected to the Senate in 1986. He served there from 1987 – 2005 and was Majority Leader from mid-2001 to January 2003. Mr. Daschle was defeated for re-election in 2004.