After a historic election that put Republicans in control of the White House and both Houses of Congress, many are beginning to feel a little like the dog that finally caught the car – not quite sure whether to hang on and try to get control before they crash or jump off and hope they don’t break their necks when they land.
As of this writing, President-elect Trump (11 days away from his inauguration) has named his choices for most of the Cabinet and top White House positions. While many are likely to draw stiff opposition from Democrats, most if not all will probably be confirmed. That’s due in part to the fact that Democrats made changes to Senate rules in 2013 (when they were the majority) that allow most nominees (except Supreme Court Justices) to be confirmed with only 51 votes instead of the usual 60. What goes around comes around.
The 115th Congress convened on Jan. 3, and House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) wasted no time setting a bold agenda, beginning with an overhaul of the Affordable Care Act (Obamacare), broad regulatory reform and comprehensive tax reform. The forging industry is keenly interested in all those subjects and will be engaging with members of Congress quickly to make sure they understand the industry’s concerns.
Here’s what to expect in the first few weeks of this Congress.
This law will likely be repealed, although it is unclear exactly what that means. The Senate has already made repeal of Obamacare part of a budget resolution. This makes it eligible for the budget reconciliation process, which means that it needs only 51 votes. Democrats may squeal, but again they have only themselves to blame. They used the same exact process to pass Obamacare in the first place, with not a single Republican vote.
The House has previously passed numerous bills repealing Obamacare, but they knew the bills had no chance to become law. This time they may proceed a bit more cautiously since there is a good chance the Senate will also pass something, and President Trump will sign it.
And therein lies the rub. Republicans desperately want to repeal Obamacare, and they have repeatedly stated that they could replace it with something better and less expensive. The problem is that they haven’t quite figured out what that “something” is, and they’re concerned that the uncertainty may create chaos in the insurance market. We expect a sort of camel to emerge from this process. Obamacare will be repealed, but the repeal won’t take effect for two to three years to allow time for Republicans to come up with a suitable “replacement.”
For at least eight years, this subject has been like Mark Twain’s observation about the weather: Everybody talked about it, but nobody did anything about it. Until now, that is. The House of Representatives is already considering a package of legislation that, if enacted into law, will make significant changes in the way agencies issue regulations and create substantial opportunities for Congressional review and disapproval of those regulations. Among the changes being considered:
- Congress can vote to disapprove so-called “midnight regulations” (those issued during the waning days of
- an Administration) en banc, or as a group, instead of
- one by one.
- Regulations with a significant impact on the economy would not go into effect until all court actions are completed.
- Congress must approve any regulation with greater than $100 million in economic impact.
The Senate is expected to consider similar legislation during 2017.
Tax reform is another subject that has been talked about extensively during the past several Congresses, but this appears to be the best chance for comprehensive reform in at least eight years and maybe for the foreseeable future. Although details are still being discussed on Capitol Hill and with Trump, some key elements under consideration are emerging, such as:
- A much lower overall corporate tax rate, with few if any exemptions. One issue of concern for forgers is making sure that pass-through entities are treated the same as corporations.
- Full expensing of capital investments in the first year
- A territorial system of international taxation
- A “border-adjustable” feature designed to make U.S. manufacturers more competitive by taxing imports and not taxing exports. A number of industries are concerned about how this might impact their supply chains, and we expect lots of conversation about this provision.