Government Affairs

11

Federal Policy Update Aug 11th

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TAX

  • Senator Hatch Speaks of Bipartisan Efforts to Achieve Tax Reform Through Regular Order:  Senate Finance Committee Chairman Hatch reiterated in an interview with Reuters and released a statement last week about “the importance of working through each of the tax-writing committees – in a bipartisan way” to craft tax reform legislation.  Hatch is one of the six leaders involved in negotiations and developing the framework for tax reform right now.  Reuters noted, “Democrats in the Senate view Senator Hatch as a lawmaker who is sincere about bipartisanship, who actually wants to get a bill that Democrats and Republicans can support.”  And while republican leadership seeks to use reconciliation to advance tax reform, bipartisan support is not precluded.  Hatch also noted his commitment to using regular order –“the committee process is going to be robust – I intend to hold multiple hearings and full markup.”
  • Senate Democrats’ Conditions for Tax Reform Legislation:  On August 1, 45 of the 48 Senate Democrats, led by Minority Leader Chuck Schumer (D-NY) and Senate Finance Committee Ranking Member Ron Wyden (D-OR), sent a letter to the President and Republican leaders that calls for bipartisan tax reform while setting out their conditions for any future tax reform legislation.  In the letter, Democrats urged Republicans not to use reconciliation and vowed to oppose a tax plan that gives new breaks to the wealthiest individuals, adds to the deficit, or paid for with cuts to programs such as Medicare, Medicaid and Social Security.  Without those requirements being met, Republicans will fail to secure votes from those 45 Democrats.  The three Democrats who did not sign the letter include Senators. Joe Manchin (D-WV), Joe Donnelly (D-IN), and Heidi Heitkamp (D-ND), all of whom represent states that Trump won in the 2016 general election.  Politico reports that Majority Leader Mitch McConnell (R-KY) responded to the Democrats’ letter by saying Republicans will need to use reconciliation as Democrats “not interested in addressing” Republican priorities.  He further stated, “I don’t think this is going to be 1986, when you had a bipartisan effort to scrub the code,” though he left the door open to winning votes from the “Democratic senators who did not sign the letter who may be open to pro-growth tax reform.”
  • White House Meeting with Centrist House Democrats on Tax Reform:  Politico reports that the White House has “quietly courted” 15-20 centrist House Democrats on tax reform.  The White House is said to also meet with Senate Democrats soon, but focus of outreach has been on the moderate House Democrats given tax reform will be initiated in the House. In multiple interviews, Blue Dog Democrats sounded eager to work with the White House on a tax bill. “The Trump administration is all too aware of congressional Republicans’ struggles to come together on a range of hot-button issues — from health care to government spending — and tax reform is littered with political minefields for the party.”  White House Director of Legislative Affairs Marc Short told Politico “We’d prefer bipartisan support for the tax plan…We still think we can earn the support of [Democrats] on the tax package.” Short acknowledged, however, that Hill Republicans “will choose the path that they want.” 
  • FY 2018 Budget:  While the House’s progress on passing a FY 2018 budget resolution is stalled given their challenges in garnering enough votes to bring their resolution to the House floor, the Senate Budget Committee said it will tackle writing its own FY 2018 budget resolution to try to move the Republican’s tax vehicle forward. (Note – at this time, Republicans intend to use the reconciliation process provided through a budget resolution to pass tax reform. The reconciliation process is valuable for the Senate to avoid a filibuster, limit debate, and pass legislation with only 51 votes.)  Senator Corker (R-TN), Member of the Budget Committee, said that committee members will begin negotiating over details in the budget, including whether to use a lower revenue target that would allow deeper reductions though tax overhaul.  Another issue on the table is whether an amended FY 2017 budget resolution, initially intended for health care reform, can now be used for tax reform.  The Parliamentarian will determine whether reconciliation bills using the FY 2017 budget would be immune from filibusters after the fiscal year ends on September 30.   

LABOR

Wages:

  • U.S. Senators Patty Murray (D-WA), Sherrod Brown (D-OH), and Al Franken (D-MN), and Representatives Rosa DeLauro (D-CT) and Bobby Scott (VA-03), reintroduced the Wage Theft Prevention and Wage Recovery Act, which would amend the Fair Labor Standards Act (FLSA) to combat employers not giving workers all the wages to which they are entitled. That includes setting a timeline for a worker to receive a final paycheck after separation from an employer and creating a civil penalty of $2,000 for employers who violate minimum wage and overtime protections of the FLSA.  This bill was introduced shortly after Democrats unveiled their new agenda called “A Better Deal:  Better Jobs, Better Wages, Better Future” that includes legislative efforts to increase employment and wages.  A House version was introduced by Rep. Rosa DeLauro (D-Conn.), with 21 Democratic co-sponsors. The Senate version's 19 co-sponsors are all Democratic caucus members. 
  • REMINDER:  The Department of Labor released a Request for Information (RFI) on July 26, proposing questions for public comment on revising the Obama administration’s rule to expand overtime eligibility.  The public has 60 days to submit their suggestions on the rule.  To note, the overtime rule has never taken effect because of litigation and, pending on the outcome of Fifth Circuit’s decision, the Trump administration is beginning to deliver on its promise to revisit the rule through this RFI.  The RFI is considered a first step to gather advice on an eventual proposal that would set a new salary threshold higher than the current $24,000 level but lower than the $47,000 figure set under the Obama administration.  During Secretary Acosta’s confirmation hearing, he said that he might be comfortable with a salary threshold in the low $30,000 range to account for inflation in recent years.  The scope of the RFI includes questions and issues beyond the salary threshold as well.  Some of the questions include:  Should the 2004 salary test be updated based on inflation? If so, which measure of inflation?  Would duties test changes be necessary if the increase was based on inflation? Would a duties-only test be preferable to the current model?  Were there specific industries/positions impacted? Which ones?

Paid Family Leave Program:

  • Senators Deb Fischer (R-NE) and Angus King (I-ME) introduced a bipartisan family leave bill that would create five-year, 25% tax credit for employers who voluntarily offer up to 12 weeks of paid family leave to employees.  Eligibility for tax credit would be limited to employees making $72,000 per year or less, or an amount equal to 60% of current definition of a highly compensated employee. 
  • In July, the U.S. Department of Labor released data in a survey on health, life, retirement and paid-leave benefits that brokers, agents and retirement specialists can use for marketing and business plans.  The Bureau of Labor Statistics’ survey showed the percentage of private employers offering paid sick leave grew from 53% in 2016 to 58% in 2017.  The percentage of civilian employers that offer paid sick leave jumped to 72%, from 68% in 2016.  At state and local governments with fewer than 50 employees, the percentage of workers with access to leave increased from 74% in 2016 to 87% in 2017.  This increase is likely due to the increase number of states and cities that have passed their own paid sick leave laws.  Think Advisor provides additional analysis on the survey results. 

OSHA

  • Bloomberg BNA reports that the Occupational Safety and Health Administration’s (OSHA) enforcement action has slightly decreased in the first six months of 2017, but not as expected under the Trump Administration.  OSHA’s enforcement data shows it opened about 17,500 inspections from January through July compared to 18,500 inspections during the same time frame in 2016.  The year-to-year decline was expected because of flat funding, cutbacks to the ranks of OSHA compliance officers and the agency encouraging area offices to mount a higher number of complicated inspections that take more time to complete.

HEALTH CARE

Health Care Reform:

  • The Senate Republicans failed to repeal the Affordable Care Act after a dismal defeat on the Senate floor at the end of July.  While many policymakers will shift to tax reform, the Senate Committee on Health, Education, Labor and Pensions  Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) will take action through the committee to stabilize the ACA insurance marketplace.  The two are well-known, particularly from their recent work on the update to No Child Left Behind, for their ability to work in a bipartisan way to get challenging bills through the committee and out of the Senate.  Politico reports that they will look to pass a bill by the end of September, which is when insurance companies make their final decisions on 2018 ACA plans.  Those who are on board with stabilizing the insurance markets in quick fashion agree on expanding state flexibility for Republicans with stabilizing the markets (ex: such as funding critical Obamacare cost-sharing subsidies) for Democrats.  The tight time frame to act will also be met with the need to unite their committee made up of some challenging and outspoken Senators, conservative Republican Rand Paul (R-KY), moderate Republicans  Susan Collins (R-ME) and Lisa Murkowski (R-AK), and liberals Bernie Sanders (I-VT) and Elizabeth Warren (D-MA).

BEVERAGE AND FOOD

Menu Labeling:

  • Food Dive reports on the Common Sense Nutrition Disclosure Act and industry’s support for this amendment to the menu labeling law:  “Back in May, just days before the menu labeling law was set to go into effect, the Food and Drug Administration extended the compliance deadline another year, to May 7, 2018.  For grocers and convenience stores who felt that the law — part of the 2010 U.S. health care overhaul — was overly burdensome and not built to accommodate retail establishments, this offered breathing room to make amendments.  The Common Sense Nutrition Disclosure Act, or H.R. 772, is one such amendment, and industry groups argue it provides much-needed flexibility.  This includes listing calorie counts by one of three different measurements: by the whole item, by serving, or by “common unit.”  The latter choice, according to the bill, refers to foods such as multi-serve items that are divided up before being presented to customers.  The bill also notes that establishments can post nutrition information “adjacent” to self-serve food items such as prepared foods, and that stores and restaurants that receive most of their business “off-premises” can list information online.”  The Common Sense Nutrition Disclosure Act was passed out of the House Energy Commerce Committee in late July.
  • REMINDER:  The Food and Drug Administration extended its deadline for comments on restaurant menu-labeling rules by 30 days after the National Restaurant Association asked for extra time beyond the original July 3 deadline.  Comments were due by August 2, 2017. 
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