WASHINGTON UPDATE

With less than 100 days until Election Day, Congress has adjourned for the August recess. Both the House and Senate will reconvene after the national party conventions, which will take place on the last week of August (Republicans) and the first week of September (Democrats). July saw a flurry of activity as Congress attempted to deal with some of the pressing issues before the month long break. Both the House and the Congressional Budget Office (CBO) addressed the Affordable Care Act (ACA) following the Supreme Court’s historic ruling in June. House and Senate leaders also made progress on a continuing resolution to fund the government and held largely political votes on the Bush tax cuts as the country edges closer to the “fiscal cliff.”

ISSUES – HEALTH CARE

Though the Supreme Court’s decision to uphold the Affordable Care Act affirmed the constitutionality of the insurance mandate, the opinion has failed to silence the call from the law’s opponents to “repeal and replace.” On July 9, the House took a largely symbolic vote to repeal the ACA. H.R. 6079 passed on a 244-185 vote with five Democratic members crossing party lines to vote in favor of repeal. Senate Democrats have made clear that they have no interest in taking additional votes on the ACA, while Senate Republicans have made equally clear that they intend to press for another repeal vote in response to the Supreme Court’s ruling.

The CBO also responded to the Supreme Court ruling with a new analysis focusing on the Supreme Court’s ruling that the ACA’s Medicaid expansion was unconstitutionally coercive. In a report released on July 24, the CBO estimated that six million people would not receive Medicaid coverage as a result of the Court’s ruling that states must be given the opportunity to opt-out of the Medicaid expansion.

The report indicates that the choice to opt-out of the Medicaid expansion will also lead to a reduction in the ACA’s cost. As a result, the CBO now expects the ACA to reduce the federal deficit by $84 billion over the 2013-2022 period. Conversely, the report indicates that the House repeal bill would add $109 billion to the deficit over the same period. Republicans continue to strongly dispute the CBO’s findings that the ACA will result in savings for the federal government.

On July 9, President Obama signed into law the reauthorization of the Prescription Drug User Fee Act (PDUFA) after the House and Senate passed the bill in late June.

The final bill included language on the accelerated approval pathway that BIO has championed. The measure also addressed the issue of drug shortage reporting requirements for biologics and vaccine manufacturers, leaving it to the discretion of the Secretary of Health and Human Services. Although negotiations continued until the eleventh hour, no final language was included on a track and trace system for drug supply chain integrity. House and Senate Members continue to work to find a path forward for track-and-trace legislation in the fall of 2012.

ISSUE – AGRICULTURE

The Senate passed a Farm Bill at the end of June, and the House Agriculture Committee advanced its own version in mid-July. The full House did not vote on the Farm Bill prior to the August recess. Instead, the House has voted for a stand-alone disaster relief package that would provide $383 million to those affected by droughts, wildfires, and other natural disasters that took place in FY2012.

Among the provisions included in the House Farm Bill proposal is a requirement that the Secretary of Agriculture, in conjunction with the Secretary of Health and Human Services and the EPA Administrator, draft a report on measures to “reduce regulatory oversight of agricultural biotechnology products.”

ISSUES – TAX POLICY AND THE “FISCAL CLIFF”

Members of the House and Senate continue to grapple with the impending “fiscal cliff” issues that will not be resolved until the lame duck session:

Expiration of the Bush tax cuts
Expiration of the payroll tax cut
Expiration of unemployment insurance benefits
Expiration of the ‘doc fix’
Expiration of expected Fiscal Year (FY) 2013 continuing resolution to fund the government beyond the end of 2012
Sequestration of $1.2 trillion in government spending ($984 billion in reductions evenly split between defense and non-defense spending plus $216 billion in debt services savings)
Likely need to increase the current debt ceiling of $16.4 trillion in late 2012 or early 2013

The Senate and House took opposing positions in July on a one-year extension of the Bush tax cuts. Senate Democrats narrowly passed President Obama’s plan to extend Bush-era tax rates for family incomes up to $250,000. The plan passed by a 51-48 vote, with Senators Lieberman (I-CT) and Webb (D-VA) voting with Republicans. Senate Republicans offered alternative legislation to extend the tax cuts for all income levels, but the measure failed on a near party line vote of 54-45, with Senator Susan Collins (R-ME) voting with the Democrats.

On August 1, the House voted to extend the Bush-era tax cuts in full. In a 256-171 vote, the Republican led majority voted for a one year extension of the tax rates for all income brackets, setting up a showdown with the President and Senate Democrats. Nineteen Democrats sided with the majority, while one Republican broke ranks to vote with Democrats.

Reconciling the House tax cut extension with the Senate tax cut extension will be the largest single item facing the Congress after the November election.

On August 3, the Senate Finance Committee passed a tax-extenders package on a bipartisan 19-5 vote. Included in the legislation are $205 billion in tax extensions. Provisions include extensions of the research and development tax credit, mortgage debt credit, alternative minimum tax relief for the middle class, and state and local sales tax deductions. A detailed summary of the legislation is included here. The House Ways and Means Committee has yet to pass its version of the tax-extender bill.

Prior to adjourning for the August recess, the House approved the Pathway to Job Creation Through a Simpler, Fairer Tax Code Bill, that would require both the House and Senate to consider tax reform legislation in 2013 according to an expedited timeline. The bill would require the House Ways and Means Committee to introduce a comprehensive tax reform bill by April 30, 2013 that would contain the following principles:

a consolidation of the current individual income tax brackets into not more than two brackets and a top rate of not more than 25%;
reduction in the corporate tax rate to not more than 25%;
repeal of the Alternative Minimum Tax;
broadening of the tax base to maintain revenue between 18% and 19% of gross domestic product (GDP); and
change from a ‘worldwide’ to a ‘territorial’ system of taxation.

The “fast track” tax reform legislation was opposed by the White House and House and Senate Democrats who fear that the bill tilts the process in favor of tax cuts for high-income households and corporations.

Congress has also taken preliminary action on sequestration. On July 25, the Senate passed the Sequestration Transparency Act, sending it to the White House. The legislation calls for the Obama Administration to lay out, in detail, the cuts to domestic and defense programs caused by sequestration. The report may add pressure to Congress to devise a bipartisan solution to avoid the painful cuts.

ISSUES – BUDGET

While it is unlikely that few if any FY 2013 spending measures will be signed into law this year, Congress has made progress on avoiding a government shutdown when the fiscal year ends on September 30. Speaker Boehner and Senate Majority Leader Reid have reached a tentative deal to keep the government funded with a continuing resolution (CR) until March 31, 2013. Both chambers are expected to pass the measure when Congress reconvenes in September. While it is conceivable that Congress still could pass an omnibus appropriations bill that runs until September 30, 2013, the deal on a six-month CR reduces the need and, thus, the likelihood of year-end omnibus spending bill.

ISSUES – ECONOMY

The July jobs report offered mixed results. The economy added 163,000 jobs; however, the overall unemployment rate rose slightly to 8.3%.

A LOOK AHEAD – SENATE ACTIVITY

The Senate is set to reconvene on September 10. While the Senate’s workload is expected to be light, it may consider the following legislation in the few weeks that Congress will be in session prior to election day:

Appropriations measures
Cybersecurity legislation
Department of Defense Authorization
A six month continuing resolution to fund the government until March 2013

A LOOK AHEAD – HOUSE ACTIVITY

The House, like the Senate, will reconvene on September 10 with a light legislative agenda. The following is a list of possible action items before Election Day:

Appropriations measures
Farm bill
Domestic Energy Production
Government regulations legislation
US Postal Service Reform legislation
A six month continuing resolution to fund the government until March 2013

A LOOK AHEAD – NATIONAL CONVENTIONS

As Congress moves into its August recess, attention turns to the national conventions.

The Republican National Convention will take place August 27-30 in Tampa, FL. Convention organizers recently released their first list of convention speakers, which includes high-profile Republicans like Senator John McCain (R-AZ), former Governor Mike Huckabee (R-AR), former Secretary of State Condoleezza Rice, and Florida Governor Rick Scott. Reports have surfaced suggesting that Governor Chris Christie (R-NJ) may give the keynote address.

Congressman Paul Ryan (R-WI) will also play a major role at the Republican National Convention. The Romney campaign announced on Saturday morning Ryan, Chairman of the House Budget Committee, has been selected to serve as Mitt Romney’s vice-presidential candidate. Congressman Ryan is perhaps best-known for his January 2010 release of the “Roadmap for America’s Future”, a proposal he authored that would make sweeping reforms to the US tax code and entitlement programs in an effort to address the growing national deficit. In announcing Ryan as his choice, Governor Romney highlighted the Congressman’s knowledge of the US economy and history of bipartisanship on Capitol Hill.

The Democratic National Convention will take place September 3-6 in Charlotte, NC. Convention organizers have released a partial list of speakers. The list includes Democratic notables, such as Massachusetts Senate candidate Elizabeth Warren and Former President Bill Clinton, who will formally nominate President Obama in a speech to the convention. Democrats have also tapped Mayor Julian Castro of San Antonio to give a keynote address.

RECENT POLLING

Job Approval: President Obama

Poll	Date	Results
Rasmussen Reports	August 1	Approve 41, Disapprove 48
Gallup	July 31	Approve 46, Disapprove 48
NBC News/Wall St. Journal	July 22	Approve 49, Disapprove 48

Job Approval: Congress

Poll	Date	Results
CBS News/NY Times	July 15	Approve 12, Disapprove 79
NPR	July 12	Approve 19, Disapprove 74
Gallup	July 12	Approve 16, Disapprove 78

General Election: Obama vs. Romney

Poll	Date	Results
Rasmussen Tracking	August 1	Obama 44, Romney 46
Gallup Tracking	August 1	Obama 47, Romney 45
NBC News/Wall St. Journal	July 22	Obama 49, Romney 43