2020 Outlook: Policymaking in an Election Year
Common knowledge may lead us to believe any hope of advancing policy in an election year is futile. Combine that trend with a divided Congress, a partisan atmosphere, and the imminent impeachment trial, and it’s easy to suggest 2020 will be a year for politics rather than policy. However, with a list of looming deadlines and the need to demonstrate the ability to not only investigate but also legislate, Congress is likely to have an active 12 months ahead.
To that end, please find below Plurus Strategies’ take on issues most likely to garner attention, and in some cases, resolution, in 2020. One caveat to many items on the list below is that the Senate will most likely need to complete its impeachment trial before meaningful legislation can move in either chamber, and Senate Majority Leader Mitch McConnell (R-KY) has advised the GOP Caucus to prepare for the start of President Donald Trump’s impeachment trial next week. In the meantime, negotiations on a multitude of issues have already begun and will continue to take place until then.
Most-Likely to Move
This category includes legislative actions most likely to move in 2020, prompted either by their forthcoming expiration, persistent interest in them during the 116th Congress, or, in some cases, because they just nearly missed the cut in 2019 and have retained bipartisan enthusiasm for passage this year.
Trade: The House passed, 385-41, the United States-Mexico-Canada Agreement (USMCA) just before the holiday recess following months of negotiations between Congressional Democrats and the Administration. The Senate Parliamentarian jointly referred the agreement to the seven committees of jurisdiction, and the Senate Finance Committee has already discharged the measure, though the fast-track process in the Senate begins once the remaining six committees also approve the implementing legislation. Once they do, the upper chamber is well-positioned to ratify the agreement early this year.
The United States Trade Representative (USTR) announced in December that the U.S. had reached a phase-one trade agreement with China in areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. President Trump will host senior officials from the Chinese government at the White House on January 15 to sign the agreement. This phase-one agreement will reduce the Section 301 List 4A tariffs, which entered into effect on September 1, 2019 and apply to $120 billion of Chinese goods by half to 7.5 percent. The administration suspended the List 4B tariffs, which were set to enter into effect on December 15, with the announcement of the phase-one agreement.
Appropriations: Following a combined eleven weeks operating under a continuing resolution (CR) last Fall, Congress and the White House came to an agreement on a year-end spending package to fund the federal government through the end of the current fiscal year, which ends September 30, 2020.
As a reminder, the budget caps deal struck last summer set top-line defense and nondefense spending levels for fiscal year 2021. Both are set to increase by $2.5 billion in fiscal year 2021 under the agreement. For that reason, House Budget Committee Chairman John Yarmuth (D-KY) has said a budget resolution, usually passed by April 15, is unlikely. However, Ranking Member Steve Womack (R-AR) indicated House Republicans perceive the budget resolution as an opportunity to tackle the federal deficit through reconciliation.
President Trump will send his budget request for fiscal year 2021 to Congress on February 10. While the president’s budget is dead on arrival, the House and Senate Appropriations Committees will almost immediately begin preparing their spending bills for the next fiscal year. Regardless of whether or not there is a budget resolution, an agreement on the subcommittee allocations, known as 302(b) numbers, for each of the 12 measures is still required.
House Majority Leader Steny Hoyer (D-MD) has indicated the House aims to pass all twelve appropriations bills by the end of June. With leadership in both houses interested in helping out members of their caucuses up for reelection in November, we anticipate the appropriations process may initially appear more aspirational than pragmatic. On the House side in particular, we understand House Democrats have been instructed to share their wish lists with leadership. Given longstanding cooperation between Senate Appropriations Chair Richard Shelby (R-AL) and Ranking Member Patrick Leahy (D-VT), the Senate process may proceed in a more balanced and bipartisan fashion.
We expect Congress will rely on at least one CR through the end of the year, and potentially another CR that will carry funding into early next year. While a CR into the first quarter of 2021 is possible, depending on the results of the November elections, we don’t rule out the possibility of an end of the year spending package. This package could also carry additional policy priorities to close out the 116th Congress, leaving a new Congress and potentially new Administration with a blank slate to begin their own governing, and allowing those retiring members one final opportunity to secure wins on legacy issues.
National Defense Authorization Act (NDAA): Following President Trump’s December 20 signing of the Fiscal Year 2020 (FY20) NDAA, the annual defense bill has now been signed into law for the last 59 consecutive years. With the current authorization scheduled to expire December 31, the House and Senate Armed Services Committees will begin work almost immediately on the FY21 NDAA.
Leader Hoyer has said the House plans to return to a traditional NDAA schedule this year after the 2019 anomaly that resulted in committee-level activity on defense appropriations before consideration of the authorization bill. More specifically, House leadership has expressed a desire to vote on the NDAA in May. Generally, the House votes before the Senate and both bills are passed in the early summer, with the potential for the conference committee to conclude its work before the August recess.
However, the routineness of the FY21 NDAA cycle could potentially be impacted by impeachment proceedings and the 2020 elections. For example, if the Senate is preoccupied with impeachment in January, deadlines for submission of NDAA requests could be extended. Further, the 2020 elections could drive urgency to wrap up the FY21 NDAA before the August recess, or alternatively, could delay conference negotiations until after Election Day.
Healthcare: The end of the year budget agreement included an extension through May 22, 2020, for several important health care programs, creating a legislative vehicle for comprehensive legislation to reduce prescription drug prices and address surprise medical bills. For the health extenders, we’ll be watching Community Health Centers, the National Health Service Corps, teaching health center graduate medical education, diabetes programs, Medicaid DSH cut delay, Temporary Assistance for Needy Families (TANF), money follows the person demonstration funding, certified community behavioral health clinic demonstration funding, health professional opportunity grant funding, and miscellaneous Medicare add-on payments and program extensions. Note also the Tax Cuts and Jobs Act of 2017 (TCJA) included a medical expense deduction that will be the first of the law to expire this year, yet again. Unless acted upon by December 31, the deduction would shrink, covering expenses that exceed 10 percent of adjusted gross income instead of the 7.5 percent currently provided in the 2017 tax bill. An extension through the end of 2020 was included in the end of the year spending agreement last month.
Prescription drug pricing remains a priority of both the White House and Congress, and the House and Senate have each worked on legislation to reduce the cost of prescription drugs. The House passed mostly along partisan lines the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3) last year, but it is not expected to move to the Senate. Late in 2019, Senate Finance Committee leadership released a new version of the Prescription Drug Pricing Reduction Act, which faces opposition from Senate Republicans. While passage of prescription drug pricing legislation remains a heavy lift, we believe the combination of the May 22 deadline on health extenders, the persistent bipartisan interest in lowering healthcare costs, and strong polling by voters around the issue opens the door to something being done on the issue in 2020.
Given ongoing bipartisan efforts in both the House and Senate to identify solutions to surprise medical bills, including in the Senate Health, Education, Labor, and Pensions (HELP) Committee and the House Energy and Commerce, Ways and Means, and Education and Labor Committees, we also view this issue as one that could ride in a May 22 package.
Continued attention on e-cigarettes in 2020 is also likely. House Energy and Commerce Chair Frank Pallone (D-NJ) is pushing for the House to take up a measure, the Reversing the Youth Epidemic Act of 2019 (H.R. 2339), that would ban some popular flavored tobacco products and require graphic health warnings on cigarette packaging and advertising.
Nominations and Oversight: We expect Senate Majority Leader Mitch McConnell (R-KY) to continue the Senate’s march toward confirming as many lifetime appointments to the federal bench as possible during his tenure as majority leader as well as immediately resume the confirmation of Trump Administration officials appointed to the Executive Branch. Whereas the Senate will spend considerable time on nominations through the end of the year, we anticipate the House will similarly continue its oversight and investigative efforts. We expect the House to renew its examination of Administration regulatory and deregulatory activities.
Water: The Water Resources Development Act (WRDA), which establishes policy for the Army Corps of Engineers, expires at the end of the year, and members of Congress have expressed their intent to secure a new authorization this year. The House Transportation and Infrastructure and Senate Environment and Public Works Committees kicked off efforts last year to pass the reauthorization on its regular biennial schedule, and members of both parties have committed to retaining their bipartisan effort on language that brings substantial benefit to districts across the country.
Other Expiring and Expired Provisions: Aside from the issues expressly noted above or below, there are a number of other expiring or expired provisions that will compel Congress to act, either by passing reauthorizations or short-term extensions to move the deadlines. These issues include the Intel/Foreign Intelligence Surveillance Act (FISA) Reauthorization, which expires March 15; the National Flood Insurance Program Reauthorization, which expires September 30; the Paid Family Leave Credit, which expires December 31; alcohol taxes, which expire December 31; and the already expired Higher Education Reauthorization and the Violence Against Women Act.
Progress Toward Post-2020 Action
This class of issues is likely to garner significant congressional and potentially Trump Administration attention throughout 2020. While an ultimate resolution during the 116th Congress for these items is less likely than those issues discussed above, we expect actions undertaken this year to set the stage for a new Congress and perhaps a new administration.
Infrastructure: The 2015 Fixing America’s Surface Transportation Act (FAST Act), which authorizes all highway and transit programs, will expire on September 30. As a result, the legislation will need to be reauthorized or extended with a mind toward the upcoming shortfall in the Highway Trust Fund, which expires in 2022. The Senate Environment and Public Works Committee unanimously advanced America’s Transportation Infrastructure Act of 2019 (S. 2302) last July and other Senate committees have begun work on infrastructure issues within their jurisdictions. While the Senate may pass a narrower highway bill, House Democrats, led by the Transportation and Infrastructure Committee, and the Trump Administration are likely to propose much more ambitious infrastructure plans. As a result, we expect a fairly clean extension of the FAST Act, at least going into 2021, while members in both houses of Congress and the Administration all work to define and potentially identify funding for the scope and parameters of a broader infrastructure package in 2021 or later.
Energy and Environment: Much of the congressional action centered around energy and environment issues this year serves as a mark in the sand for post-2020 legislative efforts, from a more robust climate bill to a Clean Energy Standard. We expect to see a flurry of activity on committees of jurisdiction as well as the House Select Committee on the Climate Crisis and the Senate Democrats’ Special Committee on the Climate Crisis, including via their plans and outlines early this year identifying what a Democratic administration and Congress might undertake.
In the meantime, knowing that their time together is term-limited, Senate Energy and Natural Resources leadership Sens. Lisa Murkowski (R-AK) and Joe Manchin (D-WV) are interested pursuing incremental energy innovation legislation that could be accomplished by packaging together some of the over eighty bills that have already been reported out of the committee this Congress. One caution, however, while there may be a genuine interest in the passage of a moderate, targeted energy bill, the odds are somewhat stacked against its success. Perhaps more than in any other issue area, energy bills tend to be omnibus measures. What we are seeing now with Sens. Murkowski and Manchin is something of a re-run of the effort Sens. Murkowski and Maria Cantwell (D-WA) undertook during their tenure as leaders of the Senate Energy and Natural Resources Committee, only this time, the effort currently appears to be an attempt to push not one package, but perhaps individual bills. Election year politics may further complicate the chances for a moderate bill or set of bills to get through both chambers and be signed by the president. That being said, the House is likely to advance some of their measures, which may simply join the other several hundred House-passed bills awaiting Senate action. If Congress is unable to get an energy package across the finish line before the end of the year, note that efforts undertaken this year and last set a strong starting point for the next Congress.
Autonomous Vehicles: This week the Department of Transportation (DOT) released the administration’s non-binding guidelines for regulation of driverless cars and trucks – “Ensuring American Leadership in Automated Vehicle Technologies: Autonomous Vehicles 4.0”. These principles are DOT’s fourth set of guidance on driverless car development, aimed to construct a unified policy approach for the 38 federal agencies, commissions, and White House offices that have a role in dealing with the technology. As a reminder, both the House and Senate produced bipartisan legislation last Congress but were unable to finalize it before the end of the 115th Congress. The Senate Commerce Committee and House Energy and Commerce Committee spent much of last year drafting language and receiving stakeholder input. Congressional staff will continue to work on their AV legislation with the first quarter of 2020 potentially seeing the release of additional draft text for stakeholder feedback.
Tax: There will be opportunities in 2020 for one or more tax packages to move, from the May 22 healthcare date to potentially a lame duck package. Several technical corrections to TCJA have strong bipartisan support and would have meaningful impacts to some sectors. Congressional Democrats in particular are likely to attempt to tie tax extenders to any tax corrections package that moves this year. Current tax extenders were passed at the end of last year and now face expiration again at the end of 2020, creating a desire for a lame duck passage of those same extenders as well as negotiation of a number of other outstanding tax items that were not ultimately included in the small tax package attached to the FY20 appropriations bills.
Technology and Telecommunications: We expect several issues in the telecommunications space to garner congressional attention this year. Already, the House has passed four bills dealing with 5G and wireless deployment, including H.Res. 575, H.R. 2881, H.R. 4500, and H.R. 3663. The Senate has also passed pirate radio legislation (H.R. 583), which passed the House last year and is now headed to the president’s desk. One of the most pressing issues will be a reinvigorated effort to legislate on C-Band. If Congress fails to move a bill before the Federal Communications Commission (FCC) conducts a spectrum auction, it could result in lost revenue to pay for other priorities, such as rural broadband, next generation 911, and “rip and replace” supply chain legislation. We also expect Congress to perform continued FCC oversight, including on other spectrum issues, such as the FCC’s 6 GHz proceeding.
Additionally, although the prospects for new legislation are low, we anticipate Congress will continue to explore Section 230 reforms to modify liability protections related to content hosted on tech platforms. The tech sector is also likely to be the subject of ongoing congressional scrutiny for stronger antitrust enforcement.
PFAS: Per- and polyfluoroalkyl substances (PFAS), a group of man-made chemicals that includes PFOA, PFOS, GenX, and about 3,000 other chemicals, received significant attention in 2019. Following intense debate throughout the year, House and Senate negotiators failed to reach an agreement to regulate PFAS as part of the end of the year packages. As promised, the House passed this week a sweeping PFAS measure, the PFAS Action Act of 2019 (H.R. 535), though the White House has taken a hard line against the comprehensive measure, and it is dead on arrival in the Senate.
Event Driven Actions
This category includes those issues that may gain significant policy and political attention in response to events that may occur throughout the year necessitating legislative and/or executive branch responses.
Sanctions: The end of the year agreement on the NDAA included a provision that would sanction companies laying the Nord Stream 2 pipeline in the sea between Russia and Germany if they do not cease their operations. Sen. Jim Risch (R-ID) applauded its inclusion in the NDAA, noting the pipeline project poses a threat to Europe’s energy security by increasing its dependence on Russian gas and bypassing Ukrainian transit and positing the sanctions will counter Russian influence while helping to protect the integrity of Europe’s energy sector.
Like most sanctions legislation, we anticipate congressional activity on new Russian sanctions is possible if there is further deterioration in the U.S.-Russia relationship. Just before the holidays, the Senate Foreign Relations Committee reported Defending American Security from Kremlin Aggression Act of 2019 (S. 482), which would impose new sanctions, by a vote of 17-5. Although Chairman Risch voted against the bill and Leader McConnell is unlikely to want to bring the bill to the floor, he may be forced to do so by some foreign policy event. Our instinct is the Democratically controlled House would be all too eager to pass new sanctions against Russia.
More recently, however, Iran appears to be the primary target for new U.S. sanctions. Following President Trump’s decision to kill Iranian general Qassem Soleimani, Iran responded by launching a rocket attack on two air bases in Iraq housing U.S. troops. There were no American casualties in this week’s missile strikes, though the U.S. intelligence community said today the crash of a passenger jet in Iran that killed 176 people was likely shot by a missile mere hours after Iran launched retaliatory missiles at the bases. While the president appears to be attempting to deescalate the tensions, the Treasury Department has approved additional economic sanctions on Iran, and even more sanctions are possible.
In the meantime, the House voted this week to require the president to cease military actions against the country unless approved by Congress or in response to an imminent threat. An attempt in the Senate to restrain the president’s war powers is not likely to be successful, though at least two Republicans support the resolution. Sen. Tim Kaine (D-VA) could bring the resolution to the floor as soon as next week.
Privacy: By the end of 2019, a number of partisan and bipartisan privacy proposals had been released in the House and Senate. In light of the California Consumer Privacy Act of 2018 (CCPA) entering into force on January 1, the urgency to legislate has slowed. Key members are continuing to explore how to construct a federal privacy standard by addressing key sticking points like preemption and private right of action. These conversations are ongoing as companies adopt to both the California law and the European Union’s (EU) General Data Protection Regulation (GDPR). Privacy experts believe these compliance efforts, as well as additional action on privacy in various other states, could make for more productive conversations between lawmakers and industry in scoping out a federal privacy standard. In the meantime, we are likely to see the introduction of smaller, standalone privacy bills, for example on children’s privacy, that may ultimately become part of a comprehensive privacy bill, likely taken up beyond 2020.
Cybersecurity: While major cybersecurity legislation may be unlikely in 2020 unless a serious breach occurs, there are smaller cyber bills where there appears to be bipartisan agreement. For example, now that there appears to be agreement regarding the definition of Internet of Things (IoT) devices, we think it is possible bills like the IoT Cybersecurity Improvement Act of 2019 (H.R. 1668) or the Internet of Things Cybersecurity Improvement Act of 2019 (S. 734) move this year. Another issue gaining steam at the end of 2019 was legislation that would allow the Department of Homeland Security (DHS) to subpoena internet service providers (ISPs) for information that may be valuable to the federal government in protecting electric grids and other critical infrastructure from cyberattacks. Beyond these priorities, we believe cyber workforce, supply chain security, election security, and encryption will continue to be themes for the congressional committees with some jurisdiction on cybersecurity matters.
Conclusion
2020 may prove to be both politically charged and legislatively productive. Democrats and Republicans on both sides of the Hill have returned to Washington with full agendas and top priorities that they can share with their constituents and in some cases carry across the finish line as legacy achievements.
Rising tensions in the Middle East and a pending impeachment trial will certainly shape any governing undertaken by Congress and the Administration. A presidential election year, with an increasingly partisan divide and Washington closely monitoring the calendar for opportunities to invoke the Congressional Review Act, will lead to both a desire to message and a need to demonstrate the ability to lead while litigating.
With the Iowa caucuses scheduled for February 4 and the State of the Union Address following the next evening, the first part of 2020 is off to a fast start. It remains to be seen how quickly the race will be run throughout the year, but we are optimistic this year could be a busy and productive one!