WHOLESALE DISTRIBUTION BEST PRACTICES

Leading wholesaler-distributors depend on NAW Institute for Distribution Excellence groundbreaking research studies because they help solve real-world business challenges.

 

YOUR 5-YEAR GROWTH ROADMAP


 

Order copies of Facing the Forces of Change®: Navigating the Seas of Disruption for everyone on your team!

 

NAW News

A Look at the Legislative Landscape for 2015

- April 2015

A quick review of the first quarter of 2015:

The first quarter of a legislative year in Congress, especially in the first session of a Congress, typically produces little new legislation of consequence. In the last decade or more, unfinished fiscal business left over from the previous year has dominated the first months of each year. While there was a bit of unfinished business that Congress had to dispatch in 2015 – specifically funding the Department of Homeland Security (see separate staff report: A Government Relations Overview) – the first quarter of 2015 was something of a break from the norm.

With the GOP now controlling both Houses of Congress, both were quick to act on the long-stalled legislation to approve the Keystone Pipeline. Although 9 Senate Democrats joined 63 GOP colleagues in supporting the bill, they were still 5 votes short of the 67 that would have been required to override the President’s veto of the measure.

Both houses of Congress also passed legislation under the Congressional Review Act (CRA) to overturn the NLRB’s controversial” Ambush” election rule. Unfortunately, but not surprisingly, President Obama vetoed that bill, too.

And both the House and Senate have passed their separate Budget Resolutions, and both Committee Chairs have promised that they will produce a Joint Concurrent Budget Resolution. While they will not complete that Budget conference report by the statutory April deadline, the fact that they are determined to do so at all is significant: Congress has not adopted a Budget Conference Report since 2009 (as an aside, the last time they met the statutory deadline was 1994). Fortunately, the Congressional Budget Resolution does not require a president’s signature, so President Obama cannot veto this measure.

The “Doc Fix” fix: Perhaps most notable, especially given the unruly House and Senate GOP Conferences, Congress has passed a significant – and bipartisan – Medicare reform measure.

Under a funding formula enacted in 1977, called the Sustainable Growth Rate (SGR), Medicare reimbursements to physicians are adjusted each year to help control Medicare spending. The SGR formula often results in draconian cuts of more than 20% in the reimbursement payments to doctors who treat Medicare patients – cuts that would inevitably result in many physicians simply declining to treat those older patients. On seventeen separate occasions, Congress has passed “doc fix” legislation to prevent the SGR cuts. The “doc fix” bills are costly, the reimbursement cuts unacceptable, a permanent change in the program badly needed, and Congress’ inability to fix the problem embarrassing.

This year, that changed. After the chaotic consideration in the House of the bill to fund the Department of Homeland Security (see separate staff report: A Government Relations Overview), Speaker Boehner began negotiations with Democrat Leader Nancy Pelosi on legislation to finally permanently address SGR. The result was a bill that includes permanent repeal of SGR, funding for a children’s health program that has long been a Democrat priority, and the first structural Medicare reforms in decades, including the GOP’s long-sought goal of means-testing part of the program. In other words, it was a negotiated compromise.

Significantly, the bill passed the House by an overwhelming vote of 392-37. The Senate followed suit, passing the bill with only 8 dissenting votes, 92-8. And President Obama signed that significant legislation into law on April 16th.

The bill was not without controversy. It was not “paid for” in the near term and was therefore opposed by some conservatives in both the House and Senate. And it included the means-testing – as well as some abortion funding restrictions that have been in the statute for decades – that were opposed by many Democrats.

With all its imperfections, it is a significant piece of legislation, and a rare compromise in a Congress that has been crippled by partisan gridlock for years. Significantly, it was a clear signal from Speaker Boehner to his Tea-Party conservatives that he is going to lead, whether or not they choose to follow.

A look in the crystal ball … what lies ahead?

No one knows at this point what other issues Congress will tackle this year (although as this Staff Report is written, an agreement on long-stalled trade legislation seems likely) and what their priorities will be…whether President Obama will work with the GOP Congress or continue to act unilaterally…if enough Senate Democrats will work with the GOP to overcome Reid-led filibusters…whether House Republicans will provide Speaker Boehner the votes he needs to manage the House.

While no one knows for certain what lies ahead, here’s a look at a few of the issues that are likely to be part of the debate.

Budget and Fiscal issues: Probably the most fundamental obligation of Congress is to discharge its fiscal duties – to pass a budget resolution, enact the spending bills that fund government departments and agencies, raise the revenue necessary to meet those spending obligations, and ensure the country’s long-term solvency. With the prospects for a Joint Budget Resolution being completed early in the year, the stage will be set for consideration of separate appropriations bills.

This is important on multiple levels. First, the gridlock in Congress in recent years – decades –has resulted in government funding for virtually all departments and agencies being rolled into one large annual “Continuing Resolution” or “Omnibus Appropriations Bill.” This process is an abdication of Congress’ obligation and right to control “the purse strings” – to authorize, approve and direct the spending of taxpayers’ dollars.

Moreover, the appropriations bills set not just spending levels, but spending priorities. When individual appropriations bills are considered, the relevant committees set their spending priorities, and then other members of Congress have the opportunity to offer amendments on the floor to change those spending priorities. Setting policy priorities through the appropriations bills would provide the GOP Congress the opportunity to send those changes to the President’s desk. Hopefully, he would sign some of those bills into law. And his vetoes would at least give voters a clear choice between advocates for one policy over another.

Energy/Environment: One of the first items to emerge in the new Congress was legislation to authorize construction of the Keystone pipeline. The House had passed Keystone legislation before and early passage by both houses in 2015 was a high priority, despite the expected veto. Other energy bills are in the pipeline, but it is not clear whether the President and the GOP Congress will come to an agreement on anything.

On the environmental front, it is likely that Congress will attempt to stall or block the President’s regulatory agenda on greenhouse gases, especially since Senate Majority Leader McConnell has vowed to fight the Obama “war on coal.” There could also be action in response to the climate change deal with China that the President announced late last year. 

Health Care: Votes to fully repeal Obamacare are certain to be held in both the House and Senate with the legislation passing the House and blocked by a Democrat filibuster in the Senate. However, budget resolutions are expected to provide the opportunity for the Senate to consider some health care legislation in a “reconciliation” bill that would not be subject to a filibuster and could therefore pass without any Democrat votes. Even in that case, however, President Obama would veto any significant changes to his signature law. While full repeal will therefore not be accomplished, a number of other initiatives, in Congress, the regulatory agencies and the courts are expected. [See separate staff report on Health Care Reform for more details.]

Immigration: Congress has not passed a comprehensive immigration bill since 1986, and it is generally believed that the flood of immigrants that came across our southern border after that bill was enacted set the stage for the anti-amnesty position held by many in Congress today. Although some of the extreme anti-immigrant voices that dominated the debate a decade ago are gone, Congress remains badly divided on the issue. Many – probably most – in the GOP believe any reform must include strong border security provisions. Unfortunately, a bill with border security and some kind of guest worker program remains elusive. Perhaps the greatest obstacle to reform is the intensity with which many Congressional Republicans distrust the President. They believe that if they enact a comprehensive immigration bill with tough border security language and a guest worker program, President Obama will ignore border security and any other provisions he dislikes, and pursue only the guest worker/amnesty provisions. Given the President’s record of taking unilateral action even when it is clearly outside his authority, that distrust is understandable. Despite the political climate, this is an issue some pundits believe Congress will tackle this year or next. 

Regulatory overreach: We fully expect a full-steam-ahead approach from the Administration in the regulatory arena. Congressional action to actually revoke regulations is very difficult to achieve. In fact the Congressional Review Act (CRA), one of the few means Congress has to revoke a regulation, has been successfully used only once, when Congress used the CRA to revoke President Bill Clinton’s ergonomics regulation – and that effort only succeeded because President Bush had been elected and signed the bill. President Obama has already vetoed the Congressional attempt to block the NLRB’s “Ambush” election rule, and would almost certainly veto any other CRA revocation passed by this Congress.

Short of actually revoking regulations, Congress will likely tackle the Obama Administration hyper-regulatory agenda by other means at its disposal. The now GOP-chaired Committees in both the House and Senate are expected to pursue aggressive agency oversight hearings, and those hearings will certainly include review of the agencies’ regulatory actions. There will also likely be legislation considered to reform our regulatory processes. One bill, the “Regulations from the Executive in Need of Scrutiny (REINS) Act” has been passed by the House several times already, and is pushed in the Senate by Rand Paul (R-KY). The REINS Act would subject executive branch regulations to Congressional review. Another bill that has even broader business support is the Regulatory Accountability Act, which would reform the regulatory process from the beginning, rather than using the REINS Act’s retroactive approach. [For more information, see our Legal Update and Staff Reports on Health Care Reform, OSHA Reform, and the Regulatory Agenda]

Reconciliation: One other topic to watch for, although it does not fit into any specific issue bucket, is “reconciliation.” Under the Congressional Budget Act, a Budget Resolution may include reconciliation language – language that instructs one or more committees to write legislation that changes current law to reconcile that law with the new spending and tax levels contained in the Budget Resolution. That sounds arcane, and it is, but it is important because reconciliation bills, like Budget Resolutions, are considered under special rules that limit the amount of time that can be spent debating them. That is of particular importance in the Senate, because reconciliation bills cannot be filibustered and require only 51 votes to pass.

While technically reconciliation bills are to be used only to adjust spending and revenue numbers, the reconciliation process has been used to pass significant legislation in recent years. Reconciliation was used to pass major parts of President Reagan’s agenda in 1981, and it was used to pass the 2001 Bush tax cuts. And, perhaps most significantly, Obamacare would never have become law had the Democrats not turned reconciliation on its head to use it to force passage of that bill. There has already been considerable speculation about how the new Senate GOP majority might use a reconciliation bill.