7 key issues facing Lame Duck Session

By U.S. Chamber of Commerce

Congress returns November 13 for an abbreviated postelection session dominated by tax and spending issues. But with just 16 working days on the congressional calendar for November and December, the outlook for progress is bleak.

“The forces of polarization are pulling both parties and the president away from the center, which in Washington has become an increasingly lonely place, says U.S. Chamber Executive Vice President for Government Affairs Bruce Josten. He sat down with Free Enterprise staff writer Sheryll Poe to discuss a host of issues in need of attention.

The 112th Congress, which convened on January 5, 2011, is now set to enter the record books as the least productive in a generation, passing a mere 173 public laws as of last month. That is well below the so-called do-nothing Congress of 1947–1948 that enacted 906 laws. “This year may be more notable for the extent to which the pending presidential contest shapes congressional activity—or, more accurately, inactivity,” says Josten. “It’s extraordinary that with a $16 trillion debt and the threat of enormous tax increases and mindless across-the-board spending cuts that Congress hasn’t even passed a budget.”

Josten outlined major issues that the lame-duck Congress will be forced to address:

Appropriations. Congress has yet to pass a single appropriations bill to fund the government in fiscal year 2013, which began on October 1, 2012. The House has cleared six appropriations bills; the Senate has cleared none. In September, Congress extended current funding through March 2013, delaying tougher, longer-term spending decisions for a later date.

Taxes. January 1, 2013, is a date circled in red on the calendar, Josten says. That’s when the 2001 and 2003 tax rates and a bevy of business tax provisions are scheduled to expire.

Spending Cuts. In addition to the expiration of the 2001and 2003 tax rates, automatic spending cuts that came out of the 2011 debt ceiling deal in Congress are also scheduled to go into effect on January 1, 2013. The administration has called for a 9.4% cut to most defense programs— except those exempted in the sequestration law—and a 10% cut to a handful of other Pentagon accounts that are not subject to annual congressional appropriations.

The combined effects of the spending cuts and tax increases 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, as the Congressional Budget Office (CBO) and many economists maintain. According to Josten, success in the lame-duck Congress would constitute an agreement on a framework for a grand bargain that addresses taxes, spending, and entitlement reform and includes specific time frames for working out the details.

Another debt ceiling is also looming. 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,” Josten says. “Congress must avoid any debt ceiling compromises that threaten our long-term fiscal health.”

Below are additional priorities for the business community that are less likely to be addressed in a lame-duck Congress because of time constraints:

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 to further open its market to imports, safeguard intellectual property, and ensure greater respect for the rule of law. 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.

Cybersecurity bill. Federal cybersecurity legislation is needed to optimize cyber threat information-sharing between government and the private sector. Congress should pass a bill to  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.

Regulatory relief legislation. 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.

High-skilled immigrant worker legislation. Rep. Lamar Smith (R-TN), chairman of the House Judiciary Committee, introduced 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 master’s or Ph.D. degree 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 exist for highly skilled and educated workers who are currently sponsored for lawful permanent resident status in the United States, send a message to high-skilled immigrants in these technology-related fields that we want them to remain in the United States and innovate here, and support employers’ efforts to create and retain jobs in America.

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