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BPAA Biweekly Federal Policy Updates - November 16

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POLITICAL UPDATE

  • House Results: Democrats have extended their lead in the midterms since election day, now with 232 seats in the House over Republicans who now hold 199 seats. Out of the races called so far, Democrats gained 37 seats. There are still 4 seats outstanding.
  • Senate Results: Republicans retained their control in the U.S. Senate with 51 seats compared to the Democrats 47 seats. Out of the races called so far, Republicans gained one seat. Remaining: the senate race between Sen. Bill Nelson (D) and Former Gov. Rick Scott (R) is headed for a recount, and the Nov. 27 Senate special election runoff in Mississippi between Democratic former Agriculture Secretary Mike Espy and Republican Sen. Cindy Hyde-Smith.
  • For a full overview of real-time elections results, please visit Politico here.

 

  • Bloomberg Government: How Democrats Won the House:
    • Democrats won a majority of House seats for the first time since the 2008 election. To do it, their candidates won 52 percent of the House vote nationwide — according to preliminary data in races where the Associated Press has declared a winner — securing 53 percent of House seats.  It’s the first election this decade in which Democrats have been able to overcome the Republican tilt of many congressional districts.  This presentation examines the unofficial 2018 votes data and how redistricting played into midterm election. Please see the powerpoint attached.

 

  • Leadership Election Highlights:
    • Senate: Republican leader Mitch McConnell (KY) will remain in his role next Congress, though six-year term limits caused a shuffling among other party leadership. Majority Whip John Cornyn (TX) won’t keep the position, causing a chain reaction that’s pushed other leaders up one rung. John Thune (SD), currently chairman of the GOP conference, will take Cornyn’s spot. John Barrasso (WY) will assume the conference chairmanship, a role that includes helping lead the Senate GOP communications effort. Roy Blunt (Mo.) will move from vice chairman of the conference into Barrasso’s prior job as chairman of the Senate Republican Policy Committee. Joni Ernst (IA) prevailed over Deb Fischer (NE) in a race for the conference vice chairmanship. Ernst is the first woman on the Senate Republican leadership team in eight years.
      • Minority Leader Chuck Schumer (NY) will stay at that post, with senior roles below him also remaining the same, including Minority Whip Dick Durbin (IL). Patty Murray (WA) was re-elected assistant Democratic leader. Debbie Stabenow (MI) will remain as the chairwoman of the Democratic Policy and Communications Committee.
    • House: Republican leader Kevin McCarthy (CA) won an election to be Minority Leader in the next Congress, beating the Freedom Caucus’ Jim Jordan (OH). McCarthy will succeed retiring House Speaker Paul Ryan (WI) as the top House Republican. Steve Scalise (LA) the current party whip, was elected to be minority whip in the next Congress. Liz Cheney (WY) will be the new House GOP conference chairwoman.
      • Meanwhile, House Minority Leader Nancy Pelosi (CA) said she will be the chamber’s next speaker despite an effort to block her ascension by Rep. Seth Moulton (MA), who said he’s “100 percent” confident there are enough House members lined up to block her.

 

  • Bloomberg Government - Probes, Possible Infrastructure Deal: What to Watch in the 116th: Investigations, infrastructure, and immigration are among the issues that will dominate the 116th Congress when a Democratic majority in the House faces the challenge of working with a Republican-controlled Senate that’s wed to President Donald Trump’s agenda. House Democratic Leader Nancy Pelosi (D-Calif.), now set to seek the speakership after her party picked up enough seats for the majority, said Democrats are more than ready to push their priorities after a half-dozen years of Republican control. The party’s to-do list includes an ambitious infrastructure program, fixes to the Affordable Care Act, and an initiative to encourage voting and small donors. The party also may work to strike early deals on trade, prescription drug prices, and possibly changes to the immigration system with congressional Republicans and Trump. “We are for bigger paychecks by building the infrastructure of America, and we are for better government by reducing the role of money in politics,” Pelosi said. “One of my themes is build, build, build.” While Pelosi is the leading contender for speaker, she may face a challenge from Rep. Tim Ryan (D-Ohio), who leads a contingent of younger Democrats who want fresher faces in leadership. Look for more partisan friction and gridlock with Republicans keeping their Senate majority. Majority Leader Mitch McConnell(R-Ky.) has pledged to keep his own focus on confirming Trump’s nominees and promoting an anti-regulatory agenda. Many bills that a Democratic House may pass could run into strong opposition in the Senate. “It is obvious that we have a very different view of what America ought to be like,” McConnell said. “It certainly will be an interesting relationship.”

 

TAX UPDATE

  • Overview from Politico: Fiscal stimulus from the GOP tax cuts is likely to start running out. The Federal Reserve is expected to keep bumping up interest rates. And few analysts expect a divided Congress — facing soaring deficits and with its eyes on 2020 — to join hands and pass a big infrastructure package or sweeping middle-class tax cuts to keep the fiscal juice going." That, along with President Donald Trump's trade wars, he says, "could deny Trump the kind of big economic growth numbers he loves to celebrate. And they could undercut one of the GOP's biggest current arguments: You may not love what Trump says or does, but the Trump economy is awesome.
     
  • Brady has drafted tax law fixes, extenders measures: Draft versions of bills to fix the "retail glitch" in the new tax law and to address temporary tax provisions known as extenders are almost ready for circulation, Ways and Means Chairman Kevin Brady (R-Texas) said Tuesday. Brady said the package will also include 70 to 80 other alterations to the tax law, H.R. 1 (115), the vast majority of which he characterized as very minor clarifications He admitted he's unsure how motivated lawmakers will be to deal with either bill during the lame-duck session that started today, adding that he had no idea how long the closing session of the current Congress will even last. Retailers and restaurants have been clamoring for a fix to a glitch in the tax law that requires them to write off certain investments over decades, rather than over one year as Republicans intended. Lawmakers have also acknowledged they need to make numerous other technical corrections and to clear up some ambiguities. "Again, we'll see what appetite there is to pass some or the bulk of them before the end of the year," Brady said. Brady said he'll soon begin circulating drafts of the extenders and corrections legislation to lawmakers and stakeholders.
     
  • Politico - NEAL AND DEAL: Rep. Richard Neal (D-Mass.), the likely next chairman of the Ways and Means Committee, "said he would consider President Donald Trump's proposal for a middle-income tax cut, but only if there are adjustments on tax rates for top income earners," The Associated Press reports. "While describing Trump's proposal as a 'campaign tactic,' Neal added that the president's request might be able to be fulfilled if the administration is prepared to make accommodations. Neal cited changes to the top individual rate as an example of what would help the bill pass." Trump didn't rule out "an adjustment" to upper-income tax rates in off-the-cuff remarks Wednesday about his proposal. Neal also promised hearings on the Tax Cuts and Jobs Act, H.R. 1 (115). "The tax bill was written in 51 days without one hearing or without one witness offering testimony," he said at a news conference in Massachusetts.

 

  • President Donald Trump said he’s open to raising some tax rates to help pay for a bigger tax break for middle-class Americans. “If the Democrats come up with an idea for tax cuts -- and I’m a big believer in tax cuts -- I would absolutely pursue something even if it means some adjustment,” Trump said during a press conference at the White House on Wednesday. When the reporter asked if that could include a corporate rate increase, Trump said “Yeah.” One of the centerpieces of Trump’s 2017 tax overhaul was slashing the corporate rate to 21 percent from 35 percent. Changes for individual taxpayers, such as rate cuts and an almost doubling of the standard deduction, were set to expire at the end of 2025 for budget reasons.
    • Less than a week before the midterm elections, the White House and chief House tax writer Kevin Brady said they would start working on a 10 percent tax cut for middle-income families next year if they maintained control of Congress. The joint statement followed almost 10 days of confusion after Trump caught Republican leaders off guard by talking about introducing a 10 percent middle-class break soon.

 

  • Harris’ Tax Cut is Even Bigger Than Trumps: Potential 2020 Democratic presidential candidate Kamala Harris' tax cut plan weighs in at $2.8 trillion, the Tax Policy Center says , or almost twice what the Tax Cuts and Jobs Act costs. All that debt is a big reason why TPC says the plan would actually hurt the economy in the long run. But it would provide a big benefit to average Americans — those in the bottom quintile of incomes would see their after-tax earnings climb 12.6 percent.

 

FOOD AND BEVERAGE

  • Politico - Beer Institute calls for inquiry into soaring aluminum prices: The Beer Institute is urging the U.S. International Trade Commission to support a government-led investigation into the rising cost of aluminum, which it says is spiking beyond normal levels based on market conditions and tariffs. "We need the commission to support an inquiry into the dramatic aluminum supply chain costs we've seen this year," said Jim McGreevy, the Institute's president, during an ITC hearing Friday focused on the economic effects of the new U.S.-Mexico-Canada Agreement. "We believe these increases are opportunistic and disconnected from market fundamentals." Aluminum costs are based in part on what's known as the Midwest Premium, an index that factors in logistical costs like sourcing and transportation from a producer to an end user. That premium has more than doubled since the beginning of 2018, McGreevy said, leading to hundreds of millions in added costs for aluminum users like brewers and beer importers. The appeal to the ITC is the Beer Institute's latest attempt to get the administration to pay attention to the issue. In May, the Institute wrote a letter to the Commerce Department asking the agency to work with the Justice Department and FTC to address "any anticompetitive conduct in the market related to the Section 232 tariffs," including any relating to the Midwest Premium. In June, a bipartisan group of 32 members of Congress called on then-Attorney General Jeff Sessions to investigate how a steadily rising premium on aluminum was artificially inflating the price of the metal.

 

  • Politico - Restaurants still struggle with food safety, employee hand washing: The food service industry is still struggling with employees not knowing when and how to properly wash their hands, according to a new FDA report released today. Around 66 percent of fast-food workers and 82 percent of employees in restaurants that participated in the study did not practice proper hand washing between 2013 and 2014, the FDA found. Restaurants also commonly failed to keep food refrigerated at proper temperatures and safe from cross-contamination during storage and preparation. The study also found that since 1998, restaurants have gotten better at properly cooking foods and requiring that no bare hands touch ready-to-eat foods.  Establishments with training and routine inspections tended to be more compliant with food safety practices. The FDA will use the findings over the next 10 years to develop safety initiatives and policies aimed at limiting food-borne illness. Restaurants have increasingly been at the center of outbreaks as more Americans eat out, with more than half of outbreaks each year associated with restaurant food, according to the CDC.

 

 

LABOR UPDATE

  • Bloomberg Government - DOL Asks to Delay Response in Lawsuit Over Tips Guidance: The U.S. Labor Department asked a judge for more time to respond to a lawsuit challenging its now-abandoned approach to workers who earn tips. The National Restaurant Association’s legal arm, the Restaurant Law Center, filed the lawsuit in July. It challenges internal DOL guidance for wage-and-hour enforcement personnel in how to approach employers that take advantage of a provision in the federal minimum wage law that lets a business count tips from customers toward the minimum wage it’s required to pay. The Fair Labor Standards Act provision has the effect of letting an employer pay a worker as little as $2.13 per hour, as long as tips carry the employee’s income to the standard minimum wage, which is $7.25. The Restaurant Law Center contended the DOL applied the guidance as though it carried the weight of a regulation that had gone through formal rulemaking, even though it was simply guidance the Obama administration added to DOL workers’ Field Operations Handbook that wasn’t entitled to the deference that a regulation receives. The guidance was an effort to address workers who earn tips and spend some of their work time on tasks that don’t generate tips, such as a server who occasionally operates a dishwasher. An employee who spends up to 20 percent of his or her work time on tasks that don’t lead to tips could be paid the tipped minimum wage, under the guidance, which is sometimes referred to as the 80/20 rule. The DOL walked back the guidance Nov. 8. The next day, it asked Judge Robert Pitman of the U.S. District Court for the Western District of Texas for more time so the agency could “more fully” prepare its response. The filing indicates the DOL conferred Nov. 9 with the Restaurant Law Center’s counsel, who didn’t oppose the extension.
     
  • Tip Credit for Dual Jobs Among Labor Agency’s Opinion Letters: Four opinion letters issued Nov. 8 by the Labor Department re-instituted earlier guidance on dual employment by tipped employees and offered new advice on applying FLSA minimum-wage and overtime exemptions to swimming-pool operations, salaried white-collar employees, and fire departments. The opinion letters from the department’s Wage and Hour Division addressed dual jobs and related duties covered by the Fair Labor Standards Act under Section 3(m) (FLSA2018-27), the application of Section 13(a)(3) to a pool-management company (FLSA2018-26), the relationship between paid salary and actual earnings (FLSA2018-25), and the application of Section 7(k) to nonprofit, privately owned volunteer fire departments (FLSA2018-24).

 

  • Bloomberg - Judge Threatens Labor Dept. With Sanctions Over Slow Action: A federal judge threatened to sanction the U.S. Labor Department if it doesn’t speed up production of documents in a lawsuit over one of Secretary Alexander Acosta’s new initiatives. The Payroll Audit Independent Determination program lets employers fess up to federal minimum wage or overtime violations without penalty if they pay back the wages they owe. Management attorneys have been reluctant to advise their clients to take advantage of it because it could expose them to liability under state law, which the DOL can’t forgive. The state of New York filed a Freedom of Information Act request in April to get information about how the DOL developed the program, followed by an August lawsuit to force the DOL to provide a better response.

 

  • OUTLOOK 2019: Congress Split Means Impasse on Labor Policy: Congress will have to collaborate more next session than in the recent past if lawmakers want to move any labor and employment measures, lobbyists and political observers told Bloomberg Law. But will that happen? Republicans and Democrats could team up for bills on expanded apprenticeships and other workforce training initiatives and dedicated funding to help rebuild the nation’s aging infrastructure. Partisan divides over new obligations for businesses, however, will likely prevent movement on a wide range of other labor and employment issues. The 116th Congress starts Jan. 3 with Democrats retaking control of the House and Republicans maintaining majority of the Senate. The power divide ends an era of Republican control of both chambers, seen in the previous two sessions. Republicans passed several proposals during that time to reverse Obama-era laws and regulations they said unduly pressured employers and thwarted job growth. The 60-vote threshold to pass legislation in the Senate has thwarted many labor bills from getting the chamber’s consideration.  Democrats’ control of the House doesn’t mean they’ll finally get to raise the federal minimum wage, alter union election rules, or move workplace protection measures. Those bills, and likely measures to limit mandatory workplace arbitration, require paid leave, and boost the nation’s union density, are dead on arrival in the Republican-controlled Senate. A legislative deadlock will have Republicans leaning more on agency leaders like Labor Department Secretary Alexander Acosta to implement the party’s agenda of deregulation and rewriting rules of the Obama administration, lobbyists say. That plan could face hiccups if Democrats force agency leaders to focus resources on a string of congressional oversight hearings.

 

SPORTS BETTING

  • Legal Sports Report: Rep. Jim Sensenbrenner (R-Wis.) is calling on the US Department of Justice to weigh in on the federal sports betting landscape. In a suggestive letter addressed to Deputy Attorney General Rod Rosenstein on Thursday, he asks the DOJ for a fresh interpretation of the relevant laws, including the Wire Act. See the document here. Sensenbrenner serves as chairman for the House Subcommittee on Crime, Terrorism, Homeland Security and Investigations, which fielded public testimony on sports betting in September. The chair closed that hearing by declaring that Congressional intervention is necessary to harness the emerging industry.
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