October 29, 2009

Five days of debate and amendments in the House Financial Services Committee have clarified important provisions in Chairman Barney Franks' (D-MA) bill (H.R. 3126). The committee approved the bill last week on a 39-29 vote. But it's still not clear why a new Consumer Financial Protection Agency is necessary or what exactly it will cover. The new CFPA will compete with existing federal regulatory agencies, which are flawed themselves. Better to fix the regulatory structure that abetted last year's financial crisis than simply throw another layer of bureaucracy atop an already shaky foundation. The House may pass Chairman Franks' handiwork without further significant changes but the Senate is likely to give the whole concept much more scrutiny, probably early next year.

SHORT TAKES

Card check.  Nothing new to report on the Employee Free Choice Act or possible compromises that might bring it to the Senate floor. The bill is in limbo, short of the 60 votes needed to move it through the chamber. But there may be another way: packing the National Labor Relations Board with card check supporters and writing it into law through the administrative process. Former SEIU attorney Craig Becker has written that the NLRB has the authority to implement card check without further action by Congress. President Obama nominated Becker to serve on the NLRB, where he'd have the chance to put his ideas into practice. Requests by the U.S. Chamber and others for a hearing on the Becker nomination prior to a confirmation vote have been ignored.

Highway and transit funding.  The first extension of SAFETEA-LU highway funding expires at the end of this week and the only sure thing is that it won't be the last. House and Senate leaders are trying to work out the length of the next extension, with the senators pushing for six months. The long-term problem remains and will bedevil committees with jurisdiction over transportation and revenues when they focus on writing a long-term bill: the Highway Trust Fund isn't raising anywhere near the money needed to fund our surface transportation needs. Two short-term infusions from general revenues were required last year just to meet existing obligations. We hope it won't take several more extensions before lawmakers develop enough imagination and political courage to take us where we need to go.

Taxes, spending, and deficits. Fiscal year 2009 ended with a budget deficit of more than $1.4 trillion, roughly a trillion dollars more than the year before. Voters are concerned, and members of Congress are responding. Exhibit A was the Senate's vote on Medicare reimbursements for doctors last week. Deficit concerns are complicating efforts by House Democrats to permanently extend the estate tax at current levels (a $3.5 million exemption per person with a 45% top rate). Without action, the estate tax goes to zero next year but then rebounds to well above current levels in 2011. The proposal would cost more than $200 billion. Proponent are considering pairing it with a goal of Blue Dogs and other deficit hawks: writing House "pay-as-you-go" rules into law, so that they couldn't be so easily ignored. Finally, the tax "extenders" expire once again at the end of this year. These provisions include the R&D tax credit, incentives to invest in depressed areas, the option to deduct state and local sales taxes, and more. The biggest - the annual alternative minimum tax (AMT) "patch" - isn't part of the usual group but faces the same problem. All are likely to be extended for another year after much hand wringing.

Immigration.  Supporters of comprehensive reform want to believe President Obama when he says the issue is a high priority. Rep. Luis Gutierrez (D-IL) plans to introduce a bill next month. The pace is slower in the Senate, where Immigration Subcommittee Chairman Charles Schumer (D-NY) has been meeting with Sen. Lindsey Graham (R-SC) on the issue. What's holding them up? Graham cites the need to "get health care done first." One thing has happened: since last month, federal contractors have been required to use E-Verify to ensure that their workers are eligible for employment in the U.S. Other jurisdictions including Los Angeles County are considering a similar mandate.

Trade.  Were the "Buy American" provision in the economic stimulus bill and the 35% tariff on Chinese tire imports harbingers of our new trade policy? Maybe. U.S. Trade Representative Ron Kirk says he sees his primary job as enforcing existing trade agreements, not opening new markets for American exports. The three long-stalled free trade agreements with Colombia, Panama, and South Korea will continue to languish without leadership from the administration. Some administration officials talk about restarting the Doha world trade talks but the many countries that take their cues on trade from U.S. attitudes are unlikely to make concessions based on what they've seen.

More union workers = cleaner air?  As part of a plan to clear the air over the Port of Los Angeles, the mayor announced a ban on older and dirtier trucks. He also planned to ban independent truckers from the port, allowing in only "employee drivers," all of them eligible to join the Teamsters Union (the independent truckers aren't). Just one problem: federal law prohibits most state and local regulation of interstate trucking. Answer: amend federal law to allow port authorities more control over trucking in their domains. That's just what Los Angeles Mayor Villaraigosa is lobbying for. In the name of clean air, of course, says the former union organizer. He's joined by New York Mayor Bloomberg and Oakland Mayor Dellums. For the sake of air quality, it's important to note that right next door the Port of Long Beach has accomplished as much without banning independent truckers. For everyone's sake, do we want to give the Teamster Union control over what moves in and out of U.S. ports?

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