PSW Spotlight: So Much To Do, So Little Time

One of the most overused – yet most accurate – clichés in Washington these days is “kicking the can down the road.” With both congressional Democrats and Republicans focused on the November elections (as well as a few upcoming primaries), every vote they cast is tinged with political overtones. Lawmakers and their party leaders are mindful of the impact their votes will have on election results, so there is jockeying by both sides to (a) protect incumbents and (b) embarrass members of the other party. In many instances this has meant that tough decisions will be postponed until the lame duck session or even the next Congress. Here’s a look at some of the key dates on the Congressional calendar and the possibility for legislative action:

August 1 – The House is scheduled to start its summer recess on Aug.1. The Senate won’t be far behind but may stay in session until Aug. 3.

Before Congress leaves in August, one of the “must-pass” bills is legislation to pump money into the Highway Trust Fund. The Transportation Department estimates that the fund will run out of money in August, resulting in reduced federal payments to states for projects to maintain, improve, and build roads and bridges.

No one is actually opposed to funding highway projects; the problem is how to raise the money to replenish the Highway Trust Fund. The fund primarily relies on the 18.4-cent federal gasoline tax, as well as a 24.4-cent diesel tax. For a number of reasons, including the fact that these taxes have not been raised since 1993, there is a shortfall between spending and revenues of about $16 billion a year. Given the impossibility of finding agreement in this Congress on some $100 billion to offset the shortfall in a six-year reauthorization, lawmakers are focusing on a smaller, stop-gap solution. On July 10, both the House Ways and Means Committee and the Senate Finance Committee cleared proposals that would shore up the Trust Fund until the spring of 2015.

The primary revenue raiser in the two packages is a proposal known as pension smoothing, which benefits companies that offer defined benefit plans to their employees. With pension smoothing, companies are able to contribute less in the short-term to these retirement plans. Since the contributions are tax-deductible, companies will pay more in taxes in the short-term and the government will have more revenue (which it can use to help offset the cost of more spending on roads and bridges).

The House cleared its version of the highway funding bill on July 15, but a date for Senate consideration has not yet been set. With the White House now saying it supports the House version, there is pressure on the Senate to simply accept the House bill and send it to the President. While Majority Leader Reid would prefer that the Senate vote on the Finance Committee version as well as the House version, there is clearly pressure for a final agreement to be reached before Aug. 1. In separate legislation, Congress will need to act before Sept. 30 to reauthorize funding for federal surface transportation programs.

September 8 – The House returns to conduct 12 legislative days of business before leaving Oct. 3 for the fall campaigns. The Senate calendar currently shows more than 12 days of work in September, but that is subject to change.

September 30 – Expiration of authorization for the Export-Import Bank

In an interesting twist, Senate Democrats – backed by the U.S. Chamber of Commerce, the National Association of Manufacturers, and other business groups– are pushing for passage of legislation to reauthorize the Export-Import Bank while House Republicans, most notably soon-to-be House Majority Leader Kevin McCarthy and House Financial Services Committee Chairman Jeb Hensarling, oppose the Bank as crony capitalism and corporate welfare. Supporters of the Ex-Im Bank, which helps U.S. companies sell their products overseas by offering lower cost loans to foreign buyers, counter that the Bank is vital to creating and sustaining jobs in the U.S. by keeping American companies competitive overseas.

The Senate hopes to begin consideration soon of a bipartisan proposal to reauthorize Ex-Im for five years, but if there is not time on the schedule to consider the measure as a stand-alone bill, Majority Leader Reid may attach it to must-pass legislation, such as the continuing resolution. Given the entrenched opposition in the House to reauthorizing the Bank, it remains to be seen how this fight will play out.

October 1 – Beginning of Fiscal Year 2015.

After Congress agreed last December to set federal funding levels for two years, Appropriation Chairs Mikulski and Rogers were hopeful that spending bills for the coming fiscal year could be cleared with relatively little drama. It was not to be. While the appropriators have stuck to the numbers given them in the budget deal, action in the Senate has been stymied by a disagreement between Democratic Leader Reid and Republican Leader McConnell.

It boils down to this: McConnell wants to offer amendments that will be difficult for some Democrats to oppose. In particular, McConnell is pushing for an amendment to block new carbon emissions regulations – a proposal that would be supported by all 45 Republicans plus a handful of Democrats, particularly those from coal states. Under Senate rules, McConnell’s amendment needs only a 51-vote majority to pass.

Reid offered to allow a vote but only if McConnell agreed to a 60-vote threshold. Reid argued that Republicans had insisted on 60 votes for major Democratic initiatives for the last five years but now would not agree to the same threshold for Republican-backed proposals. McConnell rejected the 60-vote deal so Reid came up with another offer. He would agree to a 51-vote threshold for McConnell’s amendment if McConnell would agree to the same threshold for Democratic proposals such as a minimum wage hike.

McConnell countered that the rules call for 51 votes on his amendment. This was unacceptable to Reid, so he halted floor consideration of appropriations bills. While the House has passed several appropriations measures, the impasse in the Senate means that Congress will need to approve a continuing resolution (CR) to avoid another government shutdown and keep the government running when FY 2015 begins on October 1. The CR is likely to last until the end of the year so that lawmakers can try to reach agreement on a longer-term omnibus bill during the lame duck session.

November 1 – Expiration of moratorium on Internet taxation.

In 1998, Congress approved a temporary moratorium that prevents states and localities from imposing taxes on Internet access. The moratorium has been renewed several times and is currently scheduled to expire on Nov. 1.

On July 15, the House passed legislation to make the moratorium permanent. The same day a bipartisan group of Senators introduced legislation that would (a) extend the moratorium for 10 years and (b) allow states to require Internet retailers to collect sales taxes and remit those taxes to the states where the purchases are made. The latter provision, known as the Marketplace Fairness Act, cleared the Senate in May 2013 but has yet to be considered by the House.

It’s unclear whether the Senate will be able to take up the new bill – the Marketplace and Internet Tax Fairness Act (MITFA) -- before the August recess, given other time-consuming items that could come to the Senate floor in the next two weeks, including the Highway Trust Fund bill and measures addressing the border crisis, veterans’ health care reform, and terrorism risk insurance.

November 4 – Election Day

Republicans are expected to retain the House, so all eyes are on the Senate, where Democrats currently hold a 55-45 majority.

November 12 – Anticipated start of the lame-duck session.

With a break for Thanksgiving, the House has penciled in 15 legislative days for action before adjourning in mid-December, and the Senate is likely to follow a similar schedule.

In addition to FY 2015 appropriations bills, one of the top items on the lame-duck agenda will be tax extenders. On Dec. 31, 2013, some 50 tax breaks for individuals and business expired. The list includes everything from the R&D tax credit and the production tax credit for renewable energy to the deduction individuals can take for state and local sales taxes.

In April, the Senate Finance Committee approved legislation extending the tax breaks for two years (2014 and 2015), but there has been no floor action because of an impasse between Reid and McConnell similar to the battle over consideration of appropriations bill. When the Senate began consideration of the extenders bill, McConnell made it clear that he would offer an amendment to repeal the medical device excise tax that was enacted as part of the Affordable Care Act. Reid does not want a Senate vote on that amendment (because it would likely pass) and, consequently, the bill was pulled from consideration.

There is no comparable House bill as Ways and Means Chairman Camp has taken a different path, choosing to push through bills on a piecemeal basis that would permanently extend a handful of the expiring provisions. Given Democratic opposition to permanent extension with no offsets, it’s expected that lawmakers will end up approving a bill that closely resembles the Senate Finance legislation.

November 17 – House leadership elections for next Congress.

Following the primary defeat of House Majority Leader Eric Cantor and his subsequent announcement that he would relinquish his leadership post on July 31, House Republicans chose Kevin McCarthy to take Cantor’s post for the remainder of this year and Steve Scalise to take McCarthy’s job as Majority Whip. Some members from the tea-party wing of the GOP were not happy with the election of McCarthy and may weigh in when House Republicans meet on Nov. 17 to elect their leadership for the coming Congress.

On the Senate side, no date has been set for leadership elections and, of course, the $64,000 question is whether Republicans will re-gain control of the Senate. A secondary question (that few have raised) is what will happen to the GOP leadership if Republicans win the Senate but Majority Leader McConnell loses his Kentucky seat to Democrat Alison Lundergan Grimes in what is currently a very close race.

December 12— Targeted adjournment date for the 113^th Congress. With so many issues on the lame-duck agenda, December 19 could be a more likely adjournment date.

Nancy O’Neall is a partner at Public Strategies Washington and chairs the firm’s budget practice. She is active in the Tax Coalition, an organization of professionals involved in federal tax policy making, and is a past co-chair of the group. She is also a member of Women in Housing and Finance.