By Darlene Darcy Washington Business Journal
Published: 11-06-08
From government oversight & health care reform to plans for economic recovery & energy independence mixed bag of outcomes from new administration
A team of partners from Venable LLP say change is the one certainty the results of the presidential election will bring companies that either do business with or are regulated by the federal government.
From the level of government oversight and health care reform to plans for economic recovery and energy independence the D.C.-based law firm has projected a mixed bag of positive and negative outcomes for industry players as a new administration led by Barack Obama or John McCain emerges.
Investigations and oversight: More aggressive
Already abundant investigations are likely to increase and become more aggressive in nature according to Raymond Shepherd III a partner at Venable and former chief counsel of the Senate Permanent Subcommittee on Investigations.
“Without the George Bush Administration to kick around Democratic chairmen especially Congressmen Henry Waxman D-Calif. and John Dingell D-Mich. and Senator Carl Levin D-Mich. will be able to aggressively focus their experienced and tenacious staffs on investigating waste fraud and abuse in the mortgage financial services pharmaceutical and government contracting industries” Sheperd said. “No matter who takes the oath of office on January 20th it’s going to be a frenetic year for Congressional investigations with each committee trying to out do one another in terms of substance pace and populism.”
Taxes: No win-win
The financial crisis will put serious constraints on a Democratic Congress eager to affect tax policy after eight years of Republican tax cuts according to Venable’s tax experts. Democrats “will not be able to ignore the profound challenges facing our economy and the fiscal condition of governments at all levels not to mention the coming crisis in entitlement spending for Medicare and Social Security that looms ever larger with each passing day” said Ray Beeman who previously served as Tax Counsel to the Joint Committee on Taxation.
“We can expect to see tax policy used as a tool to address concerns about income inequality in this country” said Sam Olchyk who also served as Tax Counsel to the Joint Committee on Taxation as well as the Financial Services Committee. “While many companies have indicated a willingness to broaden the corporate tax base in exchange for lower rates that is about the best outcome they can expect now.”
Financial services: President’s most compelling issue
The economy must be addressed on Day One according to William Donovan a 30-year veteran attorney representing financial services providers such as credit unions and thrifts.
“Those in the broad financial services industry should understand that Senator Obama has sent a very clear signal that he intends to pursue an activist agenda as president” Donovan said. “Overhaul of the government’s financial services regulatory structure consolidation of charter types tougher liquidity and capital requirements bankruptcy and credit card reform are all on the table.”
Pensions and retirement savings: Overhaul on the horizon
The liquidity crisis has illuminated troubled pension and retirement savings plans and the need to provide relief said Venable partner John O’Neill who served as the lead negotiator on the Pension Protection Act of 2006.
“Employers that sponsor traditional pension plans have faced devastating investment losses and are urgently seeking temporary relief from their pension contribution obligations” O’Neill said. Heavy losses have also hit employees’ 401(k)s compelling Congress to examine a “variety of different ways to strengthen Americans’ retirement security.”
Energy Independence: Higher taxes?
“To date neither candidate has proposed a comprehensive energy plan recognizing the necessity of developing all of the nation’s resources and addressing our critical infrastructure crises” said Richard Powers a Venable partner who advises energy companies on policy and regulatory issues.
Both candidates support a cap and trade system which raises the cost to use of carbon including gasoline and diesel fuel. Therefore there could be a substantial increase imposed by federal legislation in the cost of fuel said former Secretary of Transportation James Burnley who served under the President Reagan. “Obviously regardless of who is president and even with a more Democratic Congress the price range of oil will be critical to how much appetite there is for a significant fuel tax increase” Burnley said.
The House Transportation and Infrastructure Committee already is debating a $450 billion to $500 billion bill that would require a fuel tax increase. The committee chair also may consider a vehicle-miles traveled-fee system that could be indexed to the cost of construction.
Health care: Consensus escapes us
Employers must watch any reform proposals like a hawk and demand an accounting of the impact the proposals will have on the existing employment-based system and who will foot the bill for expanded health care coverage” said O’Neill.
“There is less consensus about what actually should be done and hands-on presidential leadership will be necessary to get a bill enacted.”
Employment: Revolutionary change
“The Employee Free Choice Act if enacted will bring about the most revolutionary change in the law governing union organizing in the past 50 years” said Maurice Baskin chair of Venable’s Labor and Employment Practice Group. Some say the act makes it easier for employees to unionize by allowing a union to be established as soon as a majority signs cards that indicate their intention to join rather than requiring a secret ballot election.
“The likely enactment of new civil rights damage laws paid sick leave laws government blacklisting of labor law violators expanded enforcement of immigration sanctions against employers and increased OSHA regulation will affect employers of all sizes in every industry.”
While an Obama victory and a Democratic Congress spells radical change Baskin said major changes are just as likely if McCain wins.
“The likely strengthening of the Democratic majority in Congress means that businesses can expect an avalanche of pro-labor measures... the multi-billion dollar question is whether the House and Senate leadership will be able to muster the votes to defeat a veto from President McCain.”
Administration and Congress: More collaborative
Former Senator Birch Bayh (D-IN) said that whoever wins there is likely to be a better working relationship between the new president and Congress. “Obama McCain and Joseph Biden (D-DE) all come from the Senate and have worked closely with other members throughout their careers” said Bayh an Obama supporter. “Because of that I think you will see a much more collaborative approach toward Senators and Congressmen from both sides of the aisle.”
Bayh said key to this election is whether Democrats can secure an historic majority of seats in the Senate to defeat potential filibusters. “If the Democrats hold 60 seats in the Senate... the good news is that they will be able to push through legislation the bad news is if they fail to do that they will have no one to blame but themselves” he said.
Transportation: Air and ground delays under McCain likely
Federal Aviation Administration reauthorization depends very much on who is elected” said Burnley.
A win for Obama and a Democratic Congress means that labor issues holding up the agency’s reauthorization bill will likely be resolved. Although a clash between general aviation and airlines could still delay its passage. A win for McCain however means all of the issues now holding up the bill are likely to persist he said.
Burnley also predicted a national transportation infrastructure crisis as the Highway Trust Fund operates in the red. “Congress solved the immediate problems in September by transferring $8 billion in general revenues into the trust fund” he said. “Senator Obama has endorsed a $60 billion National Infrastructure Bank but this cannot close the revenue shortfall to fund the existing commitments much less support a bigger set of highway and transit programs.”
Burnley said if McCain is elected his fight to eliminate earmarks along with the Highway Trust Fund’s systemic shortcomings could “greatly delay” legislation.
International trade: Unlikely resolved
“From a business perspective trade agreements such as those with Colombia Panama and South Korea open up export markets abroad” said Venable Senior Legislative Advisor Tiffany Moore. “Because exports now make up a greater share of gross domestic product (GDP) than at any other time the next Administration should move quickly to approve these agreements in order to drive economic growth and restore a bipartisan consensus on free and fair trade.”
Moore who helped shape trade policy as assistant U.S. trade representative since 2006 under Ambassadors Robert Portman and Susan Schwab said the likely composition of the incoming Congress will make this “incredibly difficult” and either new president will need to moderate the trade debate.
