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Legislative Updates: January 2014

 

Capitol Call

A number of people in Washington, D.C. were surprised in December when Senate Finance Chairman Max Baucus (D-Montana) announced that he had been nominated to become the Ambassador to China. He will continue to serve as Senator until his confirmation, which will occur as early as mid-February. Because of the deference that Senators give when one of their own is nominated to an Administration position, Chairman Baucus' confirmation is not in doubt.

This development puts a major wrinkle in the efforts to enact comprehensive tax reform. While tax reform efforts in the Senate were already facing long odds, Baucus's departure appears to end the prospect of tax reform being enacted in the near term. Once Chairman Baucus becomes Ambassador Baucus, the Finance Committee gavel will be passed to Senator Ron Wyden (D-Oregon), who has his own priorities that he will bring to the Committee, including many ideas to reform health care policy and an increased focus on trade issues. It is still early in the process of gauging Senator Wyden's views on comprehensive tax reform and the tax treatment of derivatives.

There have been no shake-ups in the Senate Agriculture Committee, but there hasn't been any movement on the three pending nominees for CFTC Commissioner either. The nominees are stuck because the House and Senate are still trying to find a way forward on the Farm Bill. Once an agreement is struck or an impasse is declared, Chairwoman Debbie Stabenow (D-Michigan) is expected to move on the nominees.

Over in the House, Jeb Hensarling (R-Texas), the Chairman of the House Financial Services Committee, announced his plan to conduct a comprehensive review of the Federal Reserve during 2014, its centennial anniversary. According to his press release, the Federal Reserve Centennial Oversight Project will include "an aggressive series of hearings during 2014 that will culminate with the development of legislation to reform how the nation's central bank operates." We expect that his efforts to overhaul the Federal Reserve will take up most of the Committee's time and energy this year, but we also expect oversight hearings on Dodd-Frank implementation to continue along with possible legislative action on modifications to the Volcker Rule.

Overall, election years generally include votes on very few controversial issues and more time spent on messaging that will positively resonate with the bases of the respective parties. For the Democrats, that means lots of time and effort spent on income inequality, including potential votes on increasing the minimum wage and extending unemployment insurance. For Republicans, that means many votes on legislation that "creates jobs," including proposals to increase domestic energy production, reduce the regulatory burden on businesses and, of course, modify or repeal Obamacare.

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