What to Expect From Congress for the Remainder of the Year
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Fresh off the political conventions, where they test drove their campaign stump speeches before partisan audiences, members of the House and Senate returned to Washington on September 10 to ostensibly address pressing national issues. Don’t hold your breath.
Congress hasn’t created even a pretense of industriousness, scheduling a total of just 29 work days from September through December.
However, there are three deadlines that will force Congress’ hand. The first is October 1. That’s when the 2013 fiscal year begins and when the government would shut down if Congress doesn’t pass a series of appropriations bills to fund it. Congress has yet to pass a single appropriations bill to fund the government in fiscal year 2013, which begins on October 1, 2012. The House has cleared 6 appropriations bills; the Senate has cleared none. The likely scenario is that Congress will fund the government from October 2012 through March 2013, delaying tougher, longer-term spending decisions for a later date.
January 1, 2013, is another date circled on the calendar. That’s when expiration of the 2001 and 2003 tax cuts and a bevy of business tax provisions as well as massive spending cuts triggered by sequestration are scheduled to go into effect.
If Congress and the Administration fail to come to agreement, the combined effect of spending cuts and tax increases – the so-called “fiscal cliff”- would result in a fiscal policy reduction of more than $600 billion, or about 4% of GDP—a perfect storm of contractionary tax and spending policies that could push an already fragile American economy back into recession, according to the Congressional Budget Office (CBO) and many economists.
The fiscal cliff cannot be addressed in isolation from comprehensive tax and entitlement reform. Deficits, debt, taxes, savings, investment, and entitlements are all integrally related. These larger issues won’t be fixed in short order, but the president and Congress should buy time by extending tax rates and redesigning spending cuts during a post-election lame-duck session. Doing so would start a protracted and long-overdue debate about the long-term fiscal future of the United States.
The third deadline pertains to the debt ceiling. Even after taking into account the likelihood that the Treasury Department will use "extraordinary measures" to stay below the limit, Congress will have to act sometime in the first quarter of 2013 or risk a Treasury default. Remember the debt ceiling showdown in August 2011? From that, we got the fiscal cliff. Congress must avoid any debt ceiling “compromises” that threaten our long-term fiscal health.
Unfortunately, anything not having to do with taxes and spending will have a hard time crossing the finish line in the 112th Congress. But if Congress really is focused on creating more jobs, opportunity, economic growth, and certainty, it will tackle the following:
Pass Permanent Normal Trade Relations with Russia. As a condition for joining the World Trade Organization (WTO) on August 22, Russia was required to implement a far-reaching package of legal and regulatory changes that will further open its market to imports, safeguard intellectual property, and ensure greater respect for the rule of law.
Business opportunities in Russia are expected to grow substantially after Russia finalizes its accession to the WTO. The President’s Export Council estimates that U.S. exports of goods and services to Russia—which, according to estimates, topped $11 billion in 2011—could double or triple once Russia has joined.
However, the United States won’t get the full benefits of Russia’s market-opening reforms unless Congress approves legislation establishing Permanent Normal Trade Relations with that country.
Pass a cybersecurity bill. Federal cybersecurity legislation is needed to optimize cyber-threat information-sharing between government and the private sector. Congress should pass a bill that would ensure that information voluntarily shared with the government will not lead to frivolous lawsuits, will not be publicly disclosed, and could not be used by officials to regulate other activities.
Approve the Law of the Sea Treaty. The waters and seabeds off America’s shores are rich with natural resources—oil, gas, minerals—and economic opportunity. So why aren’t they being developed? Some are, but many more could be if there was greater sovereignty and certainty surrounding the development of resources off our coasts. The Law of the Sea Treaty would provide that—and much more—if the United States would approve it as 161 other countries have already done. The Law of the Sea Treaty is an international agreement that governs the rights of and limitations for maritime nations. Entering the agreement would expand U.S. sovereignty, strengthen national security, enhance global competitiveness, and spur job-creating commercial activity.
Pass regulatory relief legislation. Businesses are struggling to comply with an avalanche of federal regulations. In July, the House passed a bill that would prevent federal agencies from imposing any major new business regulations until the unemployment rate drops back to 6% or less. It would streamline the permitting process so that projects can be developed in a timely manner, impose transparency on the abusive sue-and-settle process used by agencies and environmental groups to circumvent the rulemaking process, and prevent an outgoing president from implementing costly new federal rules between the election and subsequent inauguration. The Senate should pass this legislation.
Curtail harmful labor regulations. Congress should use appropriations riders and budget constraints to kill unfair and harmful labor regulations, including the Department of Labor’s “persuader regulation” and the National Labor Relations Board’s (NLRB’s) ambush and notice regulations. The persuader rule would effectively enable organized labor to intimidate contractors that offer advice—lawyers for example—from helping businesses exercise their free speech rights. NLRB wants to speed up union elections and deprive employers of the opportunity to rebut union propaganda.
Pass high-skilled immigrant worker legislation. Rep. Lamar Smith, chairman of the House Judiciary Committee, is working on legislation to create a new category of green cards for professionals in the STEM fields (Science, Technology, Engineering, and Mathematics). The STEM Jobs Act would allocate additional green cards for individuals who graduate with a Masters or Ph.D. in the natural sciences or engineering from a U.S. university and who have a job offer from a U.S. employer (and meet a few other, related criteria). This legislation would help reduce backlogs that currently exist for these types of workers currently sponsored for lawful permanent resident status in the U.S., send a message to high-skilled immigrants in these technology-related fields that we want them to remain in the U.S. and innovate here, and support employers’ efforts to create and retain jobs in America. The STEM Jobs Act has not yet been introduced as House Republicans attempt to work out a bipartisan deal with Democrats.