McDonald Hopkins Government Strategies Advisory: This Week in Washington -- February 6, 2015

House immigration effort fails in Senate

The House-passed Department of Homeland Security funding bill failed to overcome a procedural vote this week, getting only 51 of the 60 votes needed to stay alive in the Senate. The measure, which is filled with provisions aimed at rolling back much of President Obama’s executive action on immigration, would block Obama's executive action on immigration and place "Dreamers" and millions of other immigrants back at risk of deportation.

The vote sets up a big test for Senate Majority Leader Mitch McConnell (R-KY). McConnell will need to pull together a coalition of moderate Republicans and Democrats to pass a DHS funding bill before the February 27 deadline to avoid a department shutdown.

A united Senate Democratic caucus stood against the House-passed bill Tuesday, making it impossible to overcome the 60-vote threshold McConnell needed. Sen. Dean Heller of Nevada was the only Republican defection on the bill.

McConnell’s tactics gave conservatives, like Sens. Jeff Sessions of Alabama and Ted Cruz of Texas, what they asked for: a vote to defund Obama's executive action. The vote gave Republicans an opportunity to be opposed on-record to the president's power grab, but the next step will be much harder for McConnell. He will have to re-calibrate conservative wishes with the political reality that Republicans captured the majority, but they don't have the votes they need to move forward without Democrats' help.

McConnell will either have to find another way to fund DHS or shut down an agency that secures the border and employs America's top cops. The majority leader's predicament looks a lot like those Boehner has dealt with over and over again since he became speaker in 2011. From the farm bill to funding measures, Boehner has grown accustomed to first appeasing his conference, falling short of the votes needed, and then being forced to tune out conservative screeches to pass crucial bills.

With the failure of the bill, Democrats are calling on McConnell to simply remove the contentious immigration language and proceed. Adding to McConnell's pressures are the optics of failing to fully fund DHS when Americans are keenly aware of the growing terrorism threats from groups like the Islamic State. The Obama administration is hoping that sense of urgency will force McConnell to stare down a handful of conservatives and pass a funding bill sooner.

An overview of the the President’s budget

This week, President Barack Obama sent his budget to Congress, which builds on his message of middle class investment that he delivered in his State of the Union to Congress. Below are some of the highlights:

Transportation

The President's budget proposes a six-year transportation bill with a $478 billion price tag. This proposal represents an increase over the President's proposal in last year's budget, which was $302 billion over four-years.

The President's transportation initiatives are paid for, in part, from a $238 billion infusion of money from the taxation of repatriated corporate profits currently held overseas. The President proposes a 14 percent tax on previously held overseas corporate profits once they are repatriated, and the plan also calls for a minimum 19 percent tax on all future corporate profits repatriated.

The President's budget includes $1.25 billion (per year) for the TIGER grant program wrapped into the Transportation Trust Fund (formerly known as the Highway Trust Fund), as well as $18 billion (over six years) for the freight infrastructure plan, and $144 billion (over six years) for the passenger rail infrastructure plan including capital improvements wrapped into the Transportation Trust Fund.

The President's budget would create a new $500 million grant program called FAST (Fixing and Accelerating Surface Transportation) for projects to compete for money.

It would also create two new bond programs to spur more private capital: America Fast Forward bonds and Qualified Public Infrastructure Bonds. The first would be modeled on the Build America Bonds program from the stimulus, and the second would be a tax-exempt form of municipal bonds modeled on existing Private Activity Bonds.

Increase in capital gains

To pay for many of his proposals, President Obama will make several changes to the tax code to increase revenue. His first order of business is to increase what the White House describes as the "porous capital-gains tax." Obama plans to increase the tax from 23.8 percent for top earners to 28 percent. The White House has tried to garner GOP support for the proposal by reminding congressional Republicans that was the rate President Reagan agreed to in a tax deal in 1986.

Investment in combating climate change

President Obama has made climate change a significant second term priority. In this budget, the President makes the case for combating climate change as an effort to prevent natural disasters. In his budget, the President has marked $7.4 billion to invest in clean-energy technology. Obama also proposes giving states more money to incentivize them to take action against carbon emissions. The President proposes spending money to help coastal communities plan for shifts in local ecosystems, and he wants to invest an additional $175 million in the Federal Emergency Management Agency's Pre-Disaster Mitigation Grant Program, as well as to continue spending on water-conservation programs. While the White House admits in its budget that "it cannot be said with certainty that any individual weather event is caused by climate change," it argues that the "costs of climate change add up." Over the past 10 years, the federal government says it has spent $300 billion on natural disasters from fires to drought.

Healthcare

The budget includes $400 billion in health savings that the administrations says, "builds on the Affordable Care Act to help maintain slower cost growth while improving healthcare quality – complementing the Administration’s other efforts on delivery system reform." The President's budget seeks to raise about $1 trillion in long-term savings and extending the Medicare Hospital Insurance trust fund solvency by approximately five years.

The budget provides resources to support the Global Health Security Agenda, increases funding to eradicate polio and other global health challenges, and creates a new Impact Fund for targeted global HIV/AIDS efforts. In addition, the Budget increases funding for domestic preparedness efforts to more effectively and efficiently respond to potential future outbreaks here at home. The Budget also makes investments to address the domestic HIV epidemic to help states develop HIV implementation plans to support the goals of the National HIV/AIDS Strategy.

The budget includes more than $100 million in new investments across HHS to reduce abuse of prescription opioids and heroin, which together take the lives of 20,000 Americans per year. These new resources will:

• Increase funding for every state to expand existing Prescription Drug Monitoring Programs;
• Expand and improve the treatment for people who abuse heroin and prescription opioids; and
• Support dissemination of naloxone, an opioid antagonist that reverses the effects of opioid overdose, by first responders in an effort to prevent overdose deaths in high risk communities.

The President's budget invests over $31 billion in the National Institutes of Health with the goal of awarding 10,000 new grants for possible discoveries and cures of our nation's most challenging diseases.

Education reform

The President's America's College Promise proposal creates new federal-state partnerships to provide two years of free community college to responsible students, while promoting key reforms to improve the quality of community college offerings to ensure that they are a gateway to a career or four-year degree. If all states participate, an estimated 9 million students could benefit from this proposal.

The President's budget includes an initiative to help guarantee that Pell Grants keep pace with Inflation. Obama also hopes to help student loan borrowers manage their debt, capping student loan payments at 10 percent of monthly discretionary income.

President Obama is also looking to simplify, consolidate, and expand higher education tax credits.

Ending sequestration level spending

The President's budget calls for an increase in federal spending. Obama's budget refers to the sequestration level spending as "mindless austerity." President Obama proposes to end the sequestration level spending.

VIDEO

Watch the Washington Business Brief video, “Examining the President's Budget with Matt Henken .”

• Examining the President's Budget

House votes to repeal Affordable Care Act (again)

On Tuesday, the GOP-controlled House voted, once again, to repeal the Affordable Care Act. The vote was 239 to 186. Interestingly, three Republicans actually voted against repeal – all representing districts that are expected to be hard to hold in 2016.

It's the fourth time in four years the GOP-led House has passed a stand-alone bill to fully repeal Affordable Care Act—or the sixth time,(if you count budget resolutions, which include full repeal but are nonbinding. Including bills to defund or repeal parts of the law, the House has held more than 50 votes relating to the Affordable Care Act since Republicans took control in 2011.

President Obama has signed some of those smaller measures, but Tuesday's full-repeal bill does seem to stand a chance in being pushed through – much like its predecessors.

The vote was largely symbolic, giving freshman Republicans a chance to take an easy, politically beneficial vote, which fulfilled a campaign promise for many of them. More experienced members don't have anything to lose by reiterating their support for repeal, even if they already did so in 2011, and/or 2012, and/or 2013.

And for the party's leadership, giving the rank and file a fresh chance to declare their support for full repeal might also come in handy if Republicans find themselves trying to patch up the law this summer.

FCC will unveil net neutrality rules

The Federal Communications Commission plans to enact President Obama's proposal for net neutrality regulations that would claim expansive new powers over Internet providers.

On Wednesday, in an op-ed in technology magazine, Wired,FCC Chairman Tom Wheeler said his rules will assure "the rights of internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone's permission." He plans to fully apply "bright-line rules" to both Internet connections at home and on mobile devices.

The move is a devastating blow to Internet providers like Comcast, Verizon, and AT&T, who warn that treating the Internet like a utility will strangle investment, leading to worse service for everyone. They have all vowed to fight the rules in court.

But it's a stunning victory for net neutrality advocates, who organized a massive public campaign over the past year to pressure the FCC to enact strong regulations. More than 4 million people filed comments with the FCC, the most for any proceeding ever. In November, President Obama sided with the activists and urged the FCC, an independent agency, to enact the "strongest possible" rules.

Wheeler will share his draft regulations with the four other FCC commissioners this week, with a final vote set for February 26. He plans to ban Internet providers from intentionally blocking or slowing down any legal online content. He would also bar the providers from charging websites for access to special Internet "fast lanes."

Wheeler plans to classify broadband as a "telecommunications service" under Title II of the Communications Act, which would grant his agency broad new authorities. Net neutrality advocates argue the move is the only way to enact rules that can survive legal challenges.

The rules won't be finalized until the FCC votes on February 26. The commission's two Republicans are expected to vote against the rules, but either of the two Democrats, Jessica Rosenworcel and Mignon Clyburn, could push for alterations.

The FCC first enacted net neutrality rules in 2010, but a federal court struck them down in January, 2014. Wheeler initially proposed new rules last May that would not have relied on the stronger authority in Title II, but he reworked them in the face of the massive public backlash.

Republicans in Congress are scrambling to come up with their own legislative compromise on net neutrality to avoid utility-style authority under Title II. The leaders of the House and Senate Commerce Committees have drafted legislation that would ban any of the same behaviors as Wheeler's rules would, such as blocking websites or charging for faster service.

But the bill would also repeal much of the FCC's authority over the Internet outside of net neutrality, and Democrats have so far been resistant to work with the Republicans.

Issa eyes patent reform

The House is preparing to once again debate the issue of patent-reform. Rep. Daryl Issa (R-CA), who chairs the House Judiciary Committee’s Courts, Intellectual Property and Internet subcommittee, is one of 19 original cosponsors of the Innovation Act that was introduced on Thursday.

What remains to be seen is whether Issa will attempt to revive an effort to insert language that would expand the U.S. Patent and Trademark Office's ability to reject low-quality patents. Such language was previously strongly opposed by a number of high tech companies including IBM and Microsoft.

Opponents of such language have cautioned that raising the bar too high for software patents would kill American innovation, and they vowed to drop support for the Innovation Act unless this "poison pill" was scrubbed.

Last year, bowing to pressure from opponents, the language was dropped and the House overwhelmingly passed patent reform by a 325-91 voted. The version reintroduced Thursday is the same as the one that cleared the chamber last time.

Supporters of expanding the Patent and Trademarks Office’s review program to include software patents is the most important thing Congress can do to stem the tide of patent trolling—the act of stockpiling patents in order to use them to leach money from inventors by threatening infringement suits. The other reforms, they argue, won't be as effective in curtailing predatory patent litigation.

Transportation in focus

Drones raise privacy concerns

The recent drone crash on the White House lawn has many looking at the implications that increased drone use has on a number of areas of the law. And indeed, there is debate over whether or not the operator of that drone can, or will, face any criminal charges for the incident outside of the $1,000 fine prescribed by the FAA for operating a drone within the District of Columbia.

Drone usage is increasing dramatically across the country, and not just by hobbyists. As drones become cheaper and more capable, more police departments across the country are asking for, and getting federal approval, to use them for law enforcement.

The Federal Aviation Administration only takes safety into consideration when it grants a law enforcement agency approval to use drones, leaving privacy protections to legislation—which, depending on the state in question, may or may not exist. Unless a law enforcement agency is within one of the 14 states that have passed privacy legislation limiting how police can use drones, there's little in theory keeping it from using a drone for a less innocuous end, such as surveillance without a warrant.

Members in the House and Senate introduced bills in the previous Congress that would have required police everywhere in the country to obtain a warrant before using drones for surveillance, but the bills died at the end of the year.