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Lawmakers Plan Robust Domestic Agenda in ’08

The Iraq War and the presidential campaign will cast long shadows over the 2008 legislative agenda on Capitol Hill, but lawmakers insist they will enter the new year with robust legislative agendas.

Democrats say they are determined to press ahead with global warming legislation, for example, and are likely to want to keep the mortgage crisis at the top of their priority list.

Other issues dear to the business community, such as patent reform, also could be ripe for action.

There will be a variety of leftover bills affecting the health care sector that are likely to demand attention, and the Bush administration’s collection of free-trade agreements will be sitting on Congress’ plate — if the Democratic leadership chooses to dig in.

On key issues such as taxes, 2008 is shaping up as a year in which the two parties in Congress — and their presidential hopefuls — go about setting the contours of debate for 2009 and the next administration.

The following is an issue-by-issue rundown of the key domestic debates expected in the final year of the 110th Congress.

Energy and Environment

Democrats will mount a full-court press next year to pass legislation that seeks to reduce global warming by regulating carbon dioxide emissions.

“You will certainly see a bill produced and put forward from our committee in the early months of next year,” Rep. Rick Boucher (D-Va.), chairman of the Energy and Commerce Subcommittee on Energy and Air Quality, said earlier this month.

Under cap-and-trade, the federal government sets an annual “cap” of allowable emissions of greenhouse gases like carbon dioxide while issuing credits allowing polluters to emit prescribed levels. The credits can be bought, sold or traded, thereby creating an economic incentive to reduce pollution.

Despite the White House’s stated opposition to the scheme, Boucher said Democrats remain committed to passing the legislation in the 110th Congress.

That effort already is well under way in the Senate, where the Environment and Public Works Committee will attempt to make history in early December by passing the first cap-and-trade climate change bill through a Congressional committee.

“If we get a bill out, it will be there sitting at the desk” and ready for the floor, Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) told CongressNow last month. She said Senate Majority Leader Harry Reid (D-Nev.) is eager to tackle the issue.

A Reid spokesman said the Majority Leader will work with Boxer to bring the bill to the floor when it passes her committee.

But first, the House and Senate must resolve the competing energy independence bills they passed earlier this year. That effort has dragged on for months as Democrats have struggled to find consensus on numerous controversial provisions in the bills, including federal fuel economy standards, renewable energy mandates and energy tax provisions targeting the oil and gas industry.

Speaker Nancy Pelosi (D-Calif.) and Reid have indicated they hope to complete the bill before recessing at the end of the year.

— Geof Koss

Health Care
Lawmakers likely will spend next year completing work on two major, pending pieces of health care legislation — an expansion of the State Children’s Health Insurance Program and delaying cuts in Medicare reimbursement fees for doctors — if Congress can’t pass the bills by the end of 2007.

A top priority for Democrats is legislation that would expand SCHIP by $35 billion over the next five years to cover children from low-income and middle-class families. The legislation would be paid for by a sharp increase in the federal tobacco tax.

Both the House and Senate have passed a version of the legislation that was vetoed by President Bush, and Democrats have lacked enough support to vote to override it in the House. Senate and House Members currently are seeking to negotiate a compromise bill, but various sticking points remain, from SCHIP income level caps to earnings caps for Medicaid beneficiaries.

The current SCHIP program expires on Dec. 14, when a continuing resolution funding the government at fiscal 2007 levels also expires. Without a deal, lawmakers could seek a long-term extension of SCHIP and negotiate the bill next year.

Lawmakers also are struggling to reach agreement on legislation that would delay by one or two years a 10 percent cut in Medicare fees paid to physicians that’s due to kick in come January. If lawmakers back a one-year delay for 2008, they will need to pass a further delay for 2009 next year.

Health care experts and lobbyists say that beyond SCHIP expansion and delaying the Medicare cut, Congress will likely make little progress on other major health initiatives. One lobbyist said next year “will likely be a trial run” with lawmakers holding hearings and eyeing future prospects for health care bills, but Members are likely to hold off on major proposals, such as universal health care, until there is a new president.

“Democrats are confident they can win the White House and expand their margins in Congress, so they are content to wait and use [the issue] as a selling point for the election,” a health insurance industry lobbyist said. “Most discussion will be markers for the next administration.”

Any health care bills that pass next year will be bipartisan ones with little controversy attached. The list could include guidelines for establishing electronic health databases and expanding small business access to health care coverage.

— Stephen Langel

Housing and Financial Services
Lawmakers will continue efforts to curb looming foreclosures for as many as 2 million homeowners affected by rising interest rates on adjustable rate mortgage products in the subprime loan market.

Thus far, the House has passed legislation to regulate the subprime lending market and to provide better loan options for families through the Federal Housing Administration. Senate Democrats had hoped to bring their version of the FHA measure to the floor in November, but a bloc of Republicans voted against approving the measure without floor debate, likely pushing any further consideration of the measure to next year.

A measure to provide bankruptcy relief for those facing foreclosure also has stalled after approval by a House Judiciary subcommittee.

Lawmakers also are expected to continue work on the creation of a National Affordable Housing Trust Fund. The proposal to create 1.5 million affordable housing units over the next decade has made significant headway in the House with strong support from Financial Services Chairman Barney Frank (D-Mass.). The chamber has passed legislation to provide two funding sources for it.

One funding option, included in a bill to increase oversight of government-sponsored enterprises, would require Fannie Mae, Freddie Mac and the Federal Home Loan Banks to use proceeds from their investment portfolios to contribute to the fund. Another funding option could be using FHA surpluses.

The Senate FHA bill does not include affordable-housing funding language. Sen. Jack Reed (D-R.I.) recently introduced a GSE oversight bill that would require Fannie Mae and Freddie Mac to provide $500 million to $900 million each year for affordable housing. Other proposals to provide a comprehensive solution for the preservation of existing public housing units also are expected to emerge in the House.

— Charlene Carter

Patent Overhaul
Broad revisions to U.S. patent law likely will be delayed to the second session of the 110th Congress. More than eight years of negotiations and lobbying on the issue have resulted in House approval of its version, while talks on a few key issues including the way damages should be calculated continue in the Senate.

In April, the House and Senate introduced identical measures that would make the broadest changes to the U.S. patent system in decades. The Patent Reform Act would set up a system like those in Europe and Asia by moving to a “first-inventor-to-file” from the “first-to-invent” system under current law. It also would create a new post-grant review process and make changes to the way damages for patent infringement are calculated.

A wide variety of stakeholders, including labor and university groups, have weighed in on a debate that typically had pitted technology firms against the pharmaceutical industry. Their biggest gripes have been on the post-grant review and damage provisions, which they say could encourage infringement.

The House passed its version of the measure, making tweaks to both provisions. Still, many stakeholders are not satisfied and have been pressing the Senate to make further modifications to the language.

The Senate Judiciary Committee approved the bill in July, but Senators and the committee staff continue to work on several provisions including one on inequitable conduct. Under current law, a court must hold all of a patent’s claims of infringement invalid if it finds the patent holder has provided any misleading statements or deliberately withheld any information from the patent office.

The Senate bill would codify a standard of materiality — which would require that the information that was withheld be “important” to an examiner’s determination of patentability. Several groups including the Coalition for 21st Century Patent Reform and the Intellectual Property Owners Association want that provision strengthened.

— C.C.

Lawmakers are likely to do lots of talking next year about the need for “tax reform,” but a comprehensive rewrite of the nation’s tax code could prove difficult with Members facing re-election and pressure from key groups to preserve existing rules.

A starting point for the debate likely will be tax overhaul legislation introduced this fall by House Ways and Means Chairman Charlie Rangel (D-N.Y.). Rangel has dubbed the measure “the mother of all tax reforms” and has said he plans extensive hearings into his proposal next spring.

While Rangel proposes a host of changes to tax law, the two most widely debated are a proposal to repeal the alternative minimum tax and his plan to lower the corporate tax rate from 35 percent to 30.5 percent by eliminating scores of targeted business tax breaks and other loopholes.

No 2008 presidential contenders have yet voiced support for the plan, but Rangel has said he is willing to work with the Bush administration and tax lobbyists to come up with a measure that would pass.

Treasury Secretary Henry Paulson likely will introduce the Bush administration’s plan for a corporate tax reform measure early next year. Like the Rangel plan, it is expected to reduce the corporate tax rate.

Still, agreement could prove elusive as parties differ on how much money the government actually needs. Also, lobbying efforts are already ramping up to keep popular tax breaks, such as the research and development tax credit for businesses, from being eliminated.

In the Senate, tax reform appears to be moving even slower. Senate Finance Chairman Max Baucus (D-Mont.) faces re-election next year, and is unlikely to tackle such a controversial issue when he will be relying on K Street lobbyists for campaign contributions. Indeed, the Senate may not even consider a tax overhaul until 2010, when the Bush tax breaks passed in 2001 and 2003 are due to expire.

— Jay Heflin

With Democrats in control of Congress, the Bush administration’s chance of winning support for several free-trade agreements appears uncertain at best. The administration is pushing for lawmakers to approve free-trade deals it already has negotiated with Colombia, South Korea and Panama under fast-track trade authority rules that do not allow amendments to them.

Business interests are likely to push for the deals. But labor interests, buoyed by Democratic majorities in both chambers, are likely to stall them by raising concerns about losing U.S. job overseas, a lack of protection for foreign workers and environmental impacts. Leading Democratic presidential candidates have been outspoken in their opposition to trade deals.

Legislation providing assistance to workers hurt by trade deals is likely to enjoy more support in a Democratic Congress. The House already has approved a trade-aid package that reauthorizes and expands retraining, wage and health benefits to these workers and requires employers to give employees more notice before being laid off. The Senate has yet to act on the legislation, while the White House has threatened to veto the measure, saying it’s too expensive.

Lawmakers also will be eyeing upcoming World Trade Organization attempts to jump-start the Doha round of trade talks, which have been stalled over differences between wealthy and poor nations. The Bush administration would like to see progress on talks that aim to cut trade barriers on agricultural products, industrial goods and services before leaving office. Some lawmakers are considering opposing WTO rules for the talks as a way to further delay them.

— J.H.

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