McDonald Hopkins Government Strategies Advisory: This Week in Washington -- May 22, 2015

Short-term transportation fix

Before leaving town for the Memorial Day recess, the House passed a short-term transportation patch - and the Senate is expected to do the same before they leave as well. The bill, which passed 387-35 in the House, will extend the program for two months. Without the patch, the highway trust fund would have expired.

President Barack Obama indicated that he will sign the short-term extension even if he would prefer a long-term solution.

The traditional source of transportation funding has been revenue from the 18.4-cent-per-gallon federal gas tax. The tax has not been increased since 1993, however, and improvements in auto fuel efficiency have sapped its purchasing power.

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in $34 billion at its current rate.

Transportation advocates have pushed for an increase in the gas tax to pay for a long-term infrastructure package, but Republicans say asking drivers to pay more at the pump is a nonstarter.

Senate Majority Leader Mitch McConnell (R-Ky.) has pledged to keep the Senate in session until it deals with both the Patriot Act (see below) and passes a short-term transportation extension.

Patriot Act showdown

On the list of things Congress had to do before it left for the Memorial Day recess was deal with the expiring provisions of the Patriot Act. The House passed the USA Freedom Act before leaving town, putting the ball squarely in the Senate’s court.

As of today, the Senate still hasn’t figured out a way forward – and to some on both sides of the aisle that’s just fine. Those who oppose the bill are hoping to simply let it expire before the Senate leaves town.

It’s possible they will get their wish. On Thursday, Senate Majority Leader Mitch McConnell set up procedural votes on two opposing bills that deal with the expiring spy provisions of the Patriot Act.

McConnell moved to end debate on both the House-passed USA Freedom Act, which would end the National Security Agency's bulk collection of U.S. call records, and a two-month "clean" extension to the Patriot Act's provisions, which he and other Republican defense hawks favor.

The decision follows a 10-and-a-half-hour self-declared "filibuster" by Sen. Rand Paul (R-Ky.) that railed against the NSA's sweeping surveillance powers. The Senate is staring down a June 1 expiration of three Patriot Act provisions, including Section 215, which the NSA uses to justify its bulk collection regime.

It now appears that the Senate will hold rare weekend votes, unless somehow unanimous consent can be gained to move ahead more quickly. Absent that, the earliest either measure could advance would be on Saturday.

In the meantime, the Obama administration said the NSA must begin winding down its dragnet program today so operations are shut down by the expiration date. The White House on Thursday called on the Senate to pass the House bill.

While the White House's main objective in recent weeks has been passage of the trade bill, the administration appears to be reaching out on the USA Freedom Act. Senior administration officials met with a small bipartisan group of senators in the situation room Thursday as part of what a White House aide described as a "regular congressional engagement on the USA Freedom Act" to discuss the bill and related national security issues.

Still, it is unclear if the USA Freedom Act has the magical 60 votes right now.

The Senate could also pass a short-term extension—whether two weeks or two months—of the Patriot Act. McConnell has invoked cloture on a two-month extension, but there have been rumblings that the upper chamber could amend that to a shorter duration of maybe a couple of weeks in an effort to make it more palatable to the House. Such an effort would be procedurally tricky, and would require the out-of-town House to agree to it next week under unanimous consent during its pro forma session.

Senators from both parties continue to doubt whether this option has enough support.

If the Senate doesn't manage to pass the USA Freedom Act on Saturday, it is likely that the sections of the Patriot Act the NSA uses to sanction bulk surveillance will lapse.

Watch this week's Washington Business Brief video, A Flurry of Activity before Recess.

Time ticking on tax reform

Few issues have gotten more attention over the last couple years as comprehensive tax reform – and yet it appears the window of opportunity to get something done is closing yet again.

Tax writers in Congress thought they had the rest of the year to put together a new corporate tax scheme for the country, but now they have a new deadline—July 31. If negotiators don't come up with some kind of basic agreement by then, it will be almost impossible to implement anything but a few routine extensions of popular tax breaks before the 2016 election.

Staffers from both the House and the Senate tax writing committees said Monday that their panels haven't given up on putting together a corporate tax overhaul this year. The Finance Committee working groups are expected to submit their reports on possible areas of agreement on tax changes at the end of the month, and they will try to draft those possibilities into legislation in June and July.

But House GOP leaders last week punted at their first opportunity to move the tax reform ball forward. Now, aides involved in the effort say, the overall task is harder.

If it doesn't happen this year, tax reform in 2016 is virtually out of the question. There are too many presidential candidates in Congress who would be reluctant to vote on a tax package that directly impacts very few voters. Individual taxes aren't expected to be part of the reform bill, lawmakers and analysts agree.

Meanwhile, Democrats are becoming louder in their protest over linking any tax reform bill to a must-pass transportation bill. They argue that short-term extensions of Highway Trust Fund authority cannot continue with the carrot-and-stick lure of tax reform at the end of each postponement.

The green case for trade?

Under pressure from environmental groups who oppose the president's Trans-Pacific Partnership (TPP) trade agreement, the administration is now trying to make the green case for his deal with Pacific Rim nations.

As part of a push to sell the deal on Capitol Hill and to the American public, the U.S. trade representative and U.S. State Department unveiled a report this week highlighting what they say are the potential environmental benefits of the international agreement, a pact that the president views as a cornerstone of his economic legacy.

The White House contends that the deal will bolster trade and help the United States maintain a competitive advantage in the face of China's rapid rise. But Democratic lawmakers, labor unions, and green groups remain wary of TPP, warning that it could undercut worker rights and erase key environmental safeguards.

Now, the administration is pushing back against environmental criticism.

The Obama administration is making the case that the president has actually used trade as a way to advance environmental protections world-wide. They point to provisions of the TPP that would curb illegal wildlife-trafficking, fishing, and logging.

Additionally, the White House says that they are prepared to provide financial assistance to developing nations in the TPP - such as Brunei, Vietnam, and Malaysia - to ensure that they have the ability to live up to their environmental commitments.

Obama administration officials also point out that passing the TPP would mean countries that fail to live up to environmental commitments could face sanctions.

Indeed, Obama's Pacific trade deal includes far more environmental provisions than previous agreements such as the North American Free Trade Agreement. As a result, some groups, including the World Wildlife Fund and the Nature Conservancy, have praised the administration for its pledge to create conservation safeguards in the agreement.

While the White House hopes to blunt criticism of the deal among environmentalists, this push is unlikely to win over many opponents. Part of the reason is that many environmental organizations, including the Sierra Club and Friends of the Earth, say that their criticism of the agreement applies to provisions much broader than anything contained within the environmental chapter.

Critics from these groups fear that the deal will usher in an onslaught of legal challenges intended to undermine environmental regulations while opening the door for a flood of natural-gas exports to nations such as Japan. This in turn, the groups say, could lead to an uptick in fracking and worsen global warming.

The administration has pushed back against these claims, saying that the deal will not undermine public health or environmental safeguards. Officials also argue that the idea that natural-gas exports will result in disastrous environmental consequences is overblown.

21st Century Cures bill advances in house

This week, the House Energy and Commerce Committee passed the 21st Century Cures Act out of committee by a unanimous 51-0 vote.

“This historic day marks a big bipartisan step forward on our path to cures. We have all said too many early good-byes to people we love and treasure. Every single person has a common goal: we want more time with those we love. In this, the greatest country in the world, Americans deserve a system second to none. We can and must do better. The time for 21st Century Cures is now.” Said Energy and Commerce Chairman Rep. Fred Upton (R-Mich.) in a press release issued after the move.

Challenges for the legislation, however, remain - namely over the question of how to pay for it and the dramatically slower pace at which the Senate plans on working on the issue.

The current House draft of the bill allocates $2 billion a year for five years to the National Institutes of Health. It also aims to support researchers and young scientists, streamline clinical trials, and establish a public-private partnership to accelerate the discovery, development, and delivery of cures, treatments, and preventive measures. Additionally, it would require the FDA to issue guidance in the development of biomarkers, precision drugs, and biological products.

Ex-Im Bank deal greases wheel for trade vote

Legislation giving President Obama so-called "fast track" authority in negotiating new trade deals finally advanced in the Senate after a last-minute deal was struck, which includes an agreement to hold a vote on whether to reauthorize the Export-Import Bank.

The legislation, known as "fast track" or trade promotion authority, would help secure key objectives in the administration's economic agenda: legacy-defining trade pacts with Pacific and European countries. The vote, 62 to 38, came over the objections of anti-trade senators, who claimed that the Senate GOP leadership—President Obama's strange bedfellows on free trade—had throttled debate, allowing only two votes so far despite around 200 amendments filed.

Senate Majority Leader Mitch McConnell had set up the procedural vote Thursday despite other time-sensitive deadlines determining the NSA's bulk collection authority and highway funding.

The agreement, which allowed for the successful vote, includes a deal for a future vote on authorizing the Export-Import Bank, whose charter expires at the end of next month. The bank, which helps finances American businesses' exports, has been heavily criticized by many outside conservative groups.

Transportation in Focus

Oregon Test Drives Gas Tax Alternative

The debate over a long-term transportation bill inevitably breaks down over the question of how to pay for it. The trust fund is currently funded by a federal gas tax. But, over the last few years more and more have begun to question whether or not there is a better and smarter way to raise the money needed. One such proposal has been to switch from a gas per gallon tax to a miles driven tax.

Oregon is about to become the first state to actually try a miles driven tax. With the growing popularity of hybrids, electric cars and more fuel-efficient cars, a miles driven tax could help to raise additional revenue lost under the traditional gas tax approach.

Beginning on July 1, 5,000 Oregon drivers will volunteer to have devices installed in their cars that will collect data on how much they have driven and they will pay 1.5 cents for each mile traveled on public roads in the state.

Not surprisingly, advocates for electric and hybrid cars say the tax is unfair and would discourage the individuals from buying the environmentally friendly vehicles.

Participants in the program will receive a credit at the end of the month for gas taxes paid at the pump.

Privacy advocates, including groups like the ACLU, have expressed concerns over the digital tracking devices that will be used to track the miles driven.

To protect against those concerns, Oregon will provide participants with the option to install a tracking device that doesn't have GPS tracking. Additionally, for those who choose to use the GPS-enabled devices, the state has agreed to destroy all records from the GPS within 30 days.  

 

  

 Steven C. LaTourette, President | 202.559.2600

McDonald Hopkins Government Strategies LLC
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