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A Government Relations Overview: 2015 in Review Gridlock, Chaos, Antagonism & Accomplishments

- January 2016

As the Republican-led House of Representatives and the newly-GOP controlled Senate were sworn in last January, many pundits predicted, and some in the GOP promised, that Congress would no longer be mired in endless partisan squabbles and gridlock and, finally, Washington was going to get back to work.

Unfortunately, the hope that the new majority would immediately produce a functioning government was short-lived, and gridlock’s hold on Washington seemed secure. Nevertheless, the 114th Congress did chalk up some major accomplishments – including some significant wins on issues important to distributors and employers in general.

Gridlock – The Senate:

Last January, Senate GOP Majority Leader Mitch McConnell (R-KY) promised to run the Senate in a manner far different from that of former Majority Leader Harry Reid (D-NV), whose tight grip on the Senate effectively shut down the legislative process, prohibiting the offering of amendments to legislation on the floor and denying both the minority Republicans and his own Democrat colleagues the right to participate in the process.

Senator McConnell promised a return to “regular order,” saying he would open up the process, facilitate debate and votes, and allow Committees to work. He particularly stressed the importance of considering appropriations bills the way they are supposed to be done – 13 separate spending bills, debated individually; not one giant omnibus bill or “Continuing Resolution.”

At the same time, Leader McConnell took a strong stand against the kind of brinksmanship that conservatives in the GOP had engaged in during the preceding Congresses, declaring shortly after taking over that: “I made it very clear after the November [2014] election we’re certainly not going to shut down the government or default on the national debt.” (Reuters, March 8, 2015)

As 2015 unfolded, Senator McConnell kept his commitment to allow debate and amendments on legislation on the Senate floor. There were more votes on amendments in the Senate in January of 2015 than there were in all of 2014 under Senator Reid’s reign; there were more votes in a single day on amendments to the Keystone Pipeline bill than Senator Reid allowed in the entire previous year.

But Senator McConnell’s plan to return to a rational appropriations process did not fare as well. The Republican majority hoped to use the individual appropriations bills to facilitate debate on broad policy issues – the purpose they are intended to serve – and to allow his colleagues to offer policy amendment “riders” to those bills. However, Senator Reid was determined to prevent that debate and those votes, and the Democrat minority successfully filibustered Senator McConnell’s attempts to bring the individual appropriations bills to the floor of the Senate. The result: not a single appropriations bill passed the Senate, and in fact only one was even considered. The spending bills once again were headed toward a knife’s edge finish with threats of a government shut-down right up to the final days of the session.

Chaos – The House:

The House majority began 2015 hoping that Speaker John Boehner (R-OH) would face fewer obstacles to running the House than he had in the previous Congress. The GOP had picked up more than a dozen seats in the 2014 mid-term elections, increasing their majority to 247 seats and giving the GOP the largest Congressional majority it had had in 85 years. With that increased majority, the Speaker could lose 29 of his own members and still have a majority to pass legislation.

But the year did not begin well for him. On the opening day of the new Congress, 25 of the most conservative GOP House members voted against Mr. Boehner in his bid for re-election – the largest number of votes cast against an incumbent Speaker in the last century. And the Speaker continued to face obstruction from the determined “no-compromise” conservatives in his caucus throughout the year.

In July, the opposition to Boehner from the conservative wing of the GOP manifested itself in a “motion to vacate the chair” – an attempt to oust him from the Speakership. While that challenge from North Carolina GOP Representative Mark Meadows garnered very little support, by September the organized opposition to the Speaker – led by Ohio Congressman Jim Jordan, head of the ultra-conservative “House Freedom Caucus” – had intensified. A headline in Politico on September 8th summarized the situation: “Boehner's future as speaker in doubt.” Another “motion to vacate the chair” was certain; only its timing remained a question.

In late September, Speaker Boehner stunned Washington by announcing that he would step down from the Speakership and resign his seat in Congress at the end of October. His announcement set in motion the process of selecting a new Speaker – no small matter since the Speaker of the House stands immediately behind the Vice President in the line of succession to the Presidency.

The Speaker is elected by the entire House, not just by the majority Party, and therefore 218 votes are needed to win. Given that none of the Democrats would vote for a GOP Speaker – the House minority historically votes for its own Leader for Speaker – a successful candidate for Speaker would have to get 218 of the 247 GOP votes. The House Freedom Caucus, despite having far too few supporters to elect a Speaker from their wing of the GOP, clearly had the 29 votes necessary to be spoilers, and they threatened to defeat any candidate for Speaker who did not accede to a long list of demands they produced.

Majority Leader Kevin McCarthy (R-CA) was assumed to be the strongest candidate to succeed Mr. Boehner, but a politically inept (and inaccurate) comment about a House oversight committee damaging the candidacy of Secretary Clinton, combined with the Freedom Caucus’ refusal to support him, made his a short-lived candidacy.

With no strong candidate for Speaker coming forward, and the Freedom Caucus demands/threats, the House was thrown into chaos for several weeks following Boehner’s announcement. Needing a candidate capable of restoring stability to the House, a consensus formed behind well-respected Ways and Means Committee Chairman Paul Ryan (R-WI). The only obstacle to this solution was Congressman Ryan’s announcement that he did not want and would not run for the job.

Eventually pressure from his colleagues and his sense of duty prevailed, and Congressman Ryan agreed to run for Speaker – but only if he had the support of all factions of the GOP, including the Freedom Caucus. Mr. Ryan did eventually garner at least the acquiescence of a majority of the Freedom Caucus members, although he failed to garner their official endorsement. Notably, while he did agree to a few reforms requested by the conservatives, he did not accede to their long list of demands. But it wasn’t a complete victory for him.

The Republican House majority has a two-step process for electing a Speaker. First the GOP caucus votes on whether to support the candidate, and if he/she wins the caucus endorsement, the full House then votes. While only 9 Republican House members voted against Mr. Ryan in the official vote on the House floor, 45 Freedom Caucus conservatives voted against his candidacy in the GOP-only caucus vote – a sure sign of the troubled waters ahead for the new Speaker.

Antagonism – The White House:

Obviously, breaking the gridlock in Washington would require the cooperation of the Obama White House, and it’s difficult to describe the relationship between the Obama White House and the Congressional Republicans as anything but antagonistic. When Democratic President Bill Clinton faced a newly-elected GOP majority in Congress after the 1994 mid-term elections, he chose to work with House Speaker Newt Gingrich and the Congressional Republicans, and together they produced a balanced Federal budget and significant welfare reform. Unfortunately, President Obama chose a different path.

When President Obama delivered his State of the Union address on January 20th, 2015, he had already issued veto threats on 7 pieces of legislation – including legislation that had not yet been written. By the end of March, the President had vetoed two bills, and issued veto threats on 17 additional pieces of legislation.

In addition, the President and his agencies and departments bypassed Congress to take executive actions on multiple fronts: energy, the environment, labor, education, communications, and health care – even extending diplomatic relations to Cuba and making a nuclear deal with Iran. Adding to the executive actions, the Federal agencies stepped up the pace of their regulatory agenda, moving forward with proposed rulemaking to complete the process and announce final rules before the end of President Obama’s term in office. [See separate staff report on Regulatory Agenda]

Accomplishments – despite it all:

Despite the Democrat filibusters in the Senate, the continued internal GOP chaos in the House, and a White House uninterested in collaborative effort . . . 2015 produced a surprising number of very significant accomplishments.

They did again wrap the entire Fiscal Year 2016 spending into a single huge “Omnibus” appropriations bill, and pass a “Tax Extenders” bill extending many already-expired tax provisions retroactively to January 1, 2015. However, atypically, these two typically eleventh-hour bills contained some very positive provisions.

The Tax Extenders bill:

The tax bill enacted in December extended roughly 50 expired or expiring tax provisions. Significantly, the law makes permanent more than 20 of those provisions, including several key business tax policies, ending much of the uncertainty that businesses faced every year not knowing under what tax laws they would be operating from one month to the next. [For more information on the extenders package and the importance of permanent extensions, please see our separate Staff Report on Taxes]

Among the business tax provisions:

**The amount of allowable Section 179 annual small business expensing was reduced in January, 2015, to $25,000, from its previous level of $500,000. The new law restored the expensing level to $500,000, retroactively to January, 2015, indexed the amount to inflation, and made the change permanent. This was a huge and long-sought win for America’s small businesses.

**Bonus depreciation was extended through December 31, 2019.

**The exclusion of 100 percent of the gain on certain small business stock was permanently extended.

**The 5-year recognition period for S-Corporation built-in gains (reduced from 10 years) was made permanent.

**The Research and Experimentation (a/k/a Research and Development or “R&D”) tax credit – after being extended 16 times over more than 30 years – was finally made permanent.

If you would like more information on the tax provisions included in the 2015 year-end package, you can find a complete listing and brief summary of the provisions here:
http://waysandmeans.house.gov/wp-content/uploads/2015/12/SECTION-BY-SECTION-SUMMARY-OF-THE-PROPOSED-PATH-ACT.pdf

Health care tax provisions in the final package:

**A one-year moratorium on the Affordable Care Act’s (“ACA”) annual fee (the health insurance tax or “HIT”) on fully-insured health insurance products.

**A two-year delay in the “Cadillac tax” – the 40% excise tax on “high-cost” employer-sponsored health coverage.

**A two-year moratorium on the ACA’s 2.3% medical device excise tax.

[For more information on Health Care issues in the last Congress, please see our separate Staff Report on Health Care.]

Also noteworthy, good and bad:

The good: The final package also included a lifting of the 40-year-old ban on oil exports.

The bad: Disappointingly, an appropriations “rider” that would have rolled back the National Labor Relations Board’s Browning-Ferris/Joint Employer standard – a standard widely reported as an attack on franchises, but which will likely also impact distributors who hire staffing companies or subcontractors – was dropped from the bill at the last minute.

Other significant legislative accomplishments:

In addition to provisions in the two huge year-end bills, there were a number of other important measures signed into law last year. To recap the more important parts of the 2015 legislative track record:

**Authorization of the Keystone Pipeline (vetoed by President Obama)

**A bill revoking the NLRB’s “Ambush Election” rule (vetoed by President Obama)

**A Budget Conference Report

**A multi-year highway/transportation bill

**Trade Promotion Authority

**Reauthorization of the Elementary and Secondary Education Act

**Legislation to permanently eliminate the “Sustained Growth Rate (“SGR)” law which would have significantly reduced Medicare reimbursements to physicians and which had been addressed by temporary “Doc Fix” bills for decades; the final Doc Fix bill also contained the first-ever structural reform of the Medicare system.