Update from Washington, D.C. 01/27/2012
Following their traditional holiday recess, lawmakers returned to
Capitol Hill in mid-January to confront a crowded agenda. It’s a
new year, but Congress will be faced with many of the same issues
that plagued the first session of the 112th Congress. For
instance, lawmakers face immediate pressure to agree on how to
fund a payroll tax cut. Both parties concur that the benefit
should be extended, but they remain far apart in how to offset
the cost. Democrats want to pay for it through a surtax on
millionaires, while Republicans would prefer to cut government
spending.
After a bitter partisan debate in December, House Republicans
grudgingly accepted a two-month extension (PL 112-78) of the
payroll tax cut. The package also included an extension of
jobless benefits and a Medicare “doc fix.” That temporarily put
off a battle over how to pay for a long-term package, but not for
long, as the tax benefit will expire on February 29.
For his part, President Obama used his annual State of the Union
address on January 24 as a platform to push for initiatives aimed
at economic equity. Before a joint session of Congress, he called
on legislators to put their differences aside and pass a “clean”
extension of the payroll tax cut. That may prove to be easier
said than done as the partisan bickering that prevented Congress
from passing a long-term deal in December will continue to be an
obstacle. Election year politics are expected to further
complicate matters.
Aside from the payroll tax cut, the President also briefly
addressed transportation reauthorization. Rather than promote a
specific proposal, he suggested using the savings accrued from
the military drawbacks in Iraq and Afghanistan to rebuild the
nation’s crumbling infrastructure. It should be noted that the
idea of using savings from the military drawdown has been
proposed in the past as a deficit reduction tool; however,
critics have dismissed it as a budgetary gimmick.
In the coming weeks, surface transportation legislation is
expected to move forward in both chambers. The Senate Finance
Committee could mark up a spending package as early as next week
for a two-year highway bill (S 1813) approved by the Environment
and Public Works Committee. Meanwhile, House Republican leaders
hope to unveil their own five-year bill next week. The current
highway funding extension (PL 112-30) expires March 31.
While progress is seemingly being made, Transportation Secretary
Ray LaHood doubts whether Congress will be able to pass a surface
transportation bill this year. He does not believe the current
Congress will be able to bridge the gap on two of the most
critical issues: the length of reauthorization and how to offset
the cost.
In other transportation developments, the House and Senate voted
this week to pass another short-term extension (H.R. 3800) that
will keep the Federal Aviation Administration (FAA) running
through February 17. This gives lawmakers an additional two weeks
to negotiate a long-term deal. Leaders from both chambers have
reportedly settled their differences on controversial labor
provisions, which should clear the way for a four year
reauthorization. The biggest obstacles remaining concern
Essential Air Service subsidies, slots at Ronald Reagan
Washington National Airport and lithium battery
transportation.
On the energy front, the Federal Housing Finance Agency (FHFA)
published an Advanced Notice of Proposed Rulemaking (ANPR)
January 26 concerning mortgage assets affected by Property
Assessed Clean Energy (PACE) programs. This comes in response to
an August 2011 federal court ruling in California. The court
found that FHFA violated the Administrative Procedures Act when
it issued a statement in 2010 that essentially halted residential
PACE programs around the country. As a result, FHFA was ordered
to proceed through the formal rulemaking process on its PACE
directives. Notably, the court did not rescind the 2010
statement.
FHFA has appealed the decision, but in the meantime, the agency
has been directed to start the public notice process. The notice
poses a number of questions and asks for information on many
different aspects of PACE. Specifically, the agency is seeking
comments on whether the restrictions set forth in the 2010
statement should be maintained, changed, or eliminated.
Stakeholders have 60 days to respond to the ANPR. Written
comments must be received by FHFA on or before March 26, 2012.