An Update from Washington – Debt Ceiling, Taxes, and Health Care – Oh My!
Election year politics already have arrived at the Capitol. Members of the House and Senate in both parties have their eyes on November 4th and are putting forward agendas and proposals to position themselves favorably in the eyes of the electorate. Look and listen for a lot of rhetoric—and possibly some action—on jobs and the economy. With a significant number of Democratic Senate retirements and numerous competitive races, conventional wisdom is that control of the Senate is in play and that Republicans have a strong chance of taking the chamber in the November election. Pundits agree that the House remains solidly in Republican control and the Democrats will remain in the minority for the next two years.
With the budget deal struck by Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) late last fall, much of the Congressional work on the budget and federal appropriations already has been predetermined for the year. Treasury Secretary Jack Lew recently announced the nation will hit its debt ceiling on February 27th; so over the next two and a half weeks, the Congress is expected to enact a measure to increase the nation’s borrowing authority without the previous political jockeying and drama.
Senate Finance Committee Chairman Max Baucus (D-MT) was confirmed as U.S. Ambassador to China late last week—causing a Senatorial game of musical chairs with respect to the chairmanship of numerous committees. The Senate Finance Committee, which has tax policy writing authority, will soon be led by Ron Wyden (D-OR), who has expressed an interest in rewriting the tax code. Changes he wishes to make include increasing the standard deduction, narrowing the difference between taxation of investment income and ordinary income, and using the tax code to incentivize businesses to shift overseas earnings to investment in domestic infrastructure
The latest in the implementation of the Affordable Care Act: on Monday, February 10th the White House announced it again was modifying the requirement for businesses with between 50 and 99 employees—they now have until 2016 to provide health insurance to full-time workers (those working at least 30 hours a week) or pay a penalty. This requirement already had been delayed a year; such businesses have one more year without being subject to the mandate. Beginning this year, businesses with more than 100 full-time workers are required to offer coverage to at least 70 percent of their full-time workers or face a penalty; starting next year they must offer health care to 95 percent of their full-time workforce.
Meanwhile, Republicans in the House of Representatives are seeking to change the Affordable Care Act definition of full-time workers from 30 hours a week to 40; earlier this week, the proposal gaining some momentum with three Democrats signing on as cosponsors of the measure. However, with the Democrats still in control of the Senate, at least through this calendar year, it is highly unlikely such a measure would be brought up for a vote in that chamber. Should the Republicans sweep in November, it is likely that starting in 2015, the President will be sent numerous measures related to repealing or replacing provisions of the Affordable Care Act; if such legislation is attached to other proposals, he will be put in a difficult position of deciding whether or not to enact or veto them. Only time and the election will tell what the future holds with respect to the long term viability of health care reform.