The midterm elections were a game changer, for sure. But before a new cadre of congressman and women are sworn in, and before power in the House officially moves from left to right, the lame duck Congress has work to do.
The survivors, losers, and those senators not on the 2010 ballot return to Capitol Hill on Nov. 15 to address a host of outstanding issues. Among the most crucial:
Raise taxes? Or postpone that decision for another 18 months or two years, as some Democratic members would like?
The 2001 and 2003 income tax provisions expire on Dec 31. If Congress takes no action before then, a family of four, with two earners, making $85,000 a year, will pay about $1,800 more in federal income taxes in 2011, according to the nonpartisan Tax Foundation.
Obama has proposed higher tax rates on couples filing jointly with incomes of more than $250,000 and on individuals with incomes above $200,000. He’d leave in place the current rates for people with incomes less than $250,000.
Reining in spending
Fiery campaign rhetoric about “out of control federal spending” aside, the long-term increase in federal debt is more threatening than any one year’s excess spending.
The Congressional Budget Office warned last summer that “growing budget deficits will cause debt to rise to unsupportable levels.” And growing debt would “increase the probability of a sudden fiscal crisis.”
A bipartisan commission (headed by former Clinton chief of staff Erskine Bowles and former Wyoming Sen. Alan Simpson) is due to issue a report by Dec. 1 on how the federal government can restrain spending and cut the deficit by one third by 2015.
The commission includes discordant members, from staunch conservatives such as Rep. Jeb Hensarling of Texas to former labor union leader Andy Stern. It is hard to see the required 14 out of 18 members agreeing on a consensus set of proposals.
But ever since last spring’s Greek sovereign debt crisis, there’s been an increasing sense among some voters and members of Congress that the federal spending is on a fiscally unsustainable course.
New stopgap spending bill
Congress has passed a continuing resolution (CR) allowing the government to keep itself funded until the beginning of December. So the lame duck session will need to pass a new CR in the next few weeks, or some government agencies would begin to shut down.
Averting Medicare cuts
Medicare’s payments to doctors will be cut by nearly 30 percent by New Year’s Day. Congress seems likely to avert these cuts which are mandated by a law it passed in 1997.
Congress designed the 1997 law to keep Medicare’s payments to doctors in line with the growth rate of the overall economy, or growth in Gross Domestic Product (GDP).
But for eight years, Congress has voted to postpone the annual cuts and instead add them to next year’s scheduled cuts.
The American Medical Association is urging Congress to pass a 13-month “patch” to avert the cuts.
There’s no way to know what would happen if the 30 percent cut took effect: some doctors would continue serving Medicare patients just as before and would absorb their decline in revenue. But some might stop serving Medicare patients altogether, a trend that has already begun in some places. It “will be a catastrophe” if the cuts take effect, said Dr. Cecil Wilson, president of the American Medical Association.
Congress’s habit of postponing the cuts makes budget forecasts somewhat unrealistic. Federal law requires budget projections to assume that current law will be in effect in future years so the ten-year budget forecast assumes that Medicare spending will be curbed when experience shows that it won’t.
Greenhouse gas regulations
The U.S. Chamber of Commerce, the National Association of Manufacturers, and other industry groups want Congress to impose a moratorium on the Environmental Protection Agency’s regulations affecting stationary sources of greenhouse gas (GHG) emissions, such as power plants.
The new regulations go into effect on January 2, 2011. If not delayed, the EPA rules would hinder economic recovery and job creation, business leaders argue.
Kyle Danish, an environmental lawyer with the Washington firm of Van Ness Feldman, said Congress could either defund or delay EPA regulatory efforts.
Danish said a congressionally ordered delay in EPA rules seems more likely than defunding.
Sen. Jay Rockefeller, D-W.V., has offered a bill would delay the impact of EPA greenhouse gas regulation of stationary sources for two years, “That would allow time both for Congress to act on climate change and for the economy to recover,” Danish said.
When it was introduced earlier this year, Rockefeller's bill attracted support from a number of moderate Democrats in the Senate, Danish said.
“Supporters of a defund or delay amendment will want to attach the amendment to a bill that is very difficult for the President to veto, such as the CR,” he said.
During the lame duck session, “when Democrats still hold the leadership positions in both chambers, it may be easier for them to fend off this sort of amendment. Starting with the new Congress, however, it may be harder for them to play defense.”
Worth noting: 30 of the House Democrats who voted for the Waxman-Markey cap-and-trade GHG legislation last year were defeated on Tuesday. (Ironically one of the few GOP House members to vote for the Waxman-Markey bill was Mark Kirk, who won the Illinois Senate election Tuesday.)
The bill passed in the House by only seven votes and was never acted on by the Senate.
President Obama sounded pragmatic about the futility of pushing for Waxman-Markey type legislation in the wake of Tuesday’s Democrat defeats.
"It's doubtful that you could get the votes to pass that through the House this year or next year or the year after," Obama said.
"The smartest thing for us to do is to see if we can get Democrats and Republicans in a room ... and seeing are there ways we can make progress in the short term and invest in technologies in the long term that start giving us the tools to reduce greenhouse gases and solve this problem."
"Cap-and-trade was just one way of skinning the cat; it was not the only way," Obama said.
Nuclear weapons treaty with Russia
According to Arms Control Association executive director Daryl Kimball, “one of the few domestic or foreign policy issues upon which there is a modicum of bipartisan agreement is the new Strategic Arms Reduction Treaty” which is awaiting Senate action.
“If Senate leaders agree to spare two to three days for floor debate and a vote on the treaty, it would very likely win well over the 67 votes that are needed for ratification,” he said arguing that Tuesday’s election results “don't fundamentally change that calculus.”
The treaty with Russia would cut the number of strategic nuclear warheads on each side by approximately 30 percent and provide for monitoring and verification.
Forty six of Obama’s judicial and executive branch nominees are still on the Senate executive calendar awaiting action.
It’s conceivable Republican and Democratic leaders could agree to confirm some of non-controversial judicial nominees before year end. But the most controversial – Goodwin Liu– will almost certainly not be confirmed.
Republicans oppose Liu because they think based on his academic writings that he would rule that health insurance and other benefits are constitutionally required.
To date Obama has gotten 123 of his judicial nominees confirmed by the Senate; 47 Obama judicial nominees are pending.
Oil drilling in the Gulf of Mexico
Also being stymied for now in the Senate is Obama’s nominee to head the Office of Management and Budget, Jacob Lew.
Sen. Mary Landrieu, D-La., has put a hold on the Lew nomination to protest the Obama administration’s moratorium on deepwater oil drilling in the Gulf of Mexico.
But when Interior Secretary Ken Salazar lifted the moratorium, she said that wasn’t enough. Landrieu she wants the Obama administration to speed up “the granting of permits in shallow and deep water, and provide greater certainty about the rules and regulations (the oil and gas) industry must meet.”
She said last month that once the lame-duck session begins, she will have had time to see if the lifting of the deepwater drilling moratorium “is actually putting people back to work.”
Speaking of unemployment: without action by Congress, jobless benefits for two million unemployed people will run out by the end of December.
In September, 41.7 percent of the unemployed had been jobless for 27 weeks or more. The total number of jobless is 4.5 million higher today than in November 2008. Exit polls Tuesday found deep voter pessimism about the economy, a reflection of the persistently bad job market.
Repeal health care overhaul
“We will immediately take action to repeal this law,” House GOP leaders vowed in their Pledge to America.
Exit poll data showed broad support among conservative voters and older voters for repealing the health care overhaul. These voters were the bedrock of GOP support in the elections. In the national exit poll sample a plurality of all voters, 48 percent, supported repeal.
But Senate Democrats would likely block any repeal attempt. In the new congress, House Republicans can use their control of investigating committees to grill administration officials on the law.
House Republican leader John Boehner has called the law a "monstrosity."
At his Wednesday press conference Obama said “there are going to be examples where I think we can tweak and make improvements,” but continued to argue, just as he did before the election, that the bill would benefit Americans.
Sometime in the first of half of next year, the new Congress will need to vote on raising the debt limit. That vote will put some newly elected GOP members in an awkward spot since they campaigned on a pledge of opposing more borrowing and spending.
House Republican Whip Eric Cantor said last week, “We need to demonstrate a commitment and the fiscal discipline and an established track record, by the time that vote comes, of cutting spending,” he said.
He specifically called for reducing the federal workforce and making federal pay comparable to that in private sector. He said GOP leaders need to “show the people that we are serious in terms of reducing the size of government and the federal deficit, in order to see that vote successful on increasing the size of the debt limit.”
There are only six weeks between the start of the lame duck session on Nov. 15 and the last day of the year. Subtract weekends and Thanksgiving Day and Christmas Day, there are only 34 days left, precious little time to do lots of deal making.