Privacy Policy
Washington2 Advocates (W2A) supports efforts to protect consumer privacy on the Internet.  We post our privacy policy to demonstrate our commitment to this issue.  We also want to inform those interested in our company about how we use information provided through the Internet.  While we track the volume of traffic to our page, we make no effort to collect personally identifiable information about the web-surfing habits of individuals.

Just because we aren't nosy doesn't mean that we don't want to hear from you.  If you would like to get in touch, please contact us! Thank you for taking the time to read our privacy policy.

Legal Statement
This website and the materials on it have been made available by Washington2 Advocates to the general public for informational purposes only.  The information provided is not legal opinion or legal advice.

For additional information please contact us.

W2A UPDATE: January 4, 2012

OUR TAKE: TONY VS. JEFF – UPDATE ON THE PRESIDENTAL RACE

TONY: IOWA IS ALL GOOD FOR ROMNEY

Last night was a very good night for Mitt Romney. First, he finished first and first is a good thing at this point -- yes, by 8 votes, but first is still first. Second, Iowa is a caucus state, which is a tougher environment for him because the electorate is far more conservative than regular R primary voters, and, yet, he still came in first.Third, his most prominent opponents – Rick Perry and Newt Gingrich – both had dismal showings.And, finally, the man who came in second, Rick Santorum, doesn’t have the reach to adequately compete in a state-by-state battle with Romney over the next two months.From my vantage point, I believe Romney took a huge first step to the Republican nomination.

Up next is New Hampshire, and Romney is ahead by 25+ points in most polls, which suggests he will win again next week, and that will further increase the feeling of inevitability around his campaign.His numbers will likely come down a bit this week as his opponents attack him over the next few days, but he will also pick up support from Republicans hungry to beat Obama (like me) – all of which suggests that Romney will be two for two heading into South Carolina.South Carolina (on January 21st) will be a much tougher battle for him because of the uber-conservative nature of SC GOP primary voters, but I wouldn’t be surprised to see Romney win there if Santorum, Paul and Gingrich are all still in the race for that one (they should be), which would split the strong conservative vote three ways.After South Carolina comes Florida (January 31st). In Florida, Romney appeals to traditional R’s, and what will be an even larger financial advantage for him by then (coming in first always helps fund-raising) should push him to another victory, and then the long slog toward nomination will truly take place.

Of course, things can always change in a New York minute (remember that Obama beat Hillary in Iowa and then lost the next week in New Hampshire which sent the two of them off on a very very long slog), but right now this race feels very much in hand for Romney. At this point, I have still not signed up with any of the presidential campaigns, but, based upon last night, I am guessing I will be writing a check soon to the Romney campaign.

JEFF: TONY HAS IT RIGHT!

Mitt Romney demonstrated that good organization and the ability to control the message on TV is still the first rule in running a good campaign. The media will do everything possible to keep us interested in the Republican nomination battle, but barring a major self-inflicted wound, Governor Romney will slog out a nomination win. I predicted Newt Gingrich would do better, but did not think he would be outspent almost 8 to 1 by Romney and friends. You simply cannot run a decent statewide/national campaign without the ability to buy TV ads and get your message out to the voters. Happy New Year everyone!!

===================================================================================

W2A UPDATE: DECEMBER 5, 2011

OUR TAKE: Tony vs. Jeff – Update on the Presidential Race

Tony

I still think Mitt Romney is going to be the Republican nominee for President in 2012.

The newest conservative flavor of the month is former House Speaker Newt Gingrich, and my guess is that he will over-reach soon, and make a mistake that brings him back down to earth.

In the mid and late 90s, I was able to watch Newt frequently from a front-row seat as a staffer to Senator Slade Gorton.  What I saw during those years was a brilliant mind regularly undermined by an incredibly undisciplined man.  It’s almost like he is two separate persons:  Mr. Brilliant and Mr. “What the heck is going on with him?”

There is no doubt that Newt Gingrich is one of the smartest men in our country.  There is also no doubt that HE thinks he is one of the smartest men in our country.  And there is also no doubt that he will find ways during the next several weeks to let all of us know both of those things.

My biggest anxiety about Newt is that because he lacks discipline, he has a tendency to veer from issue-to-issue and cause-to-cause based upon whatever has captures his mind on that specific day, and at his worse, that particular hour.  He also has a tendency to come off as petty and mean-spirited, which will not serve him well during the tense primary period.  Now, we all deserve a chance to grow and learn from our past mistakes, and perhaps this truly is a new, improved and disciplined Newt Gingrich.  Certainly, we will learn all of that in the next two months.

Regardless, I still think Romney will be the nominee because he is disciplined, and he is the safe choice for Republicans.  Given these difficult economic times, the overall weakness of Obama (I still think he has an uphill climb to re-election), and the brand challenges facing the Republican Party, the strategic choice for 2012 is Romney.  Yes, he’s been stuck at 20+ percent for months now, but he is also the only Republican candidate who has been stuck at 20+ percent for months.  He is definitely not the “heart” candidate for Republicans, but in this environment, it’s pretty good to be so overwhelmingly the “head” candidate amongst this field.

Of course, primary voters rarely vote strategically – they vote with their hearts and tend to follow their passions vs. using their heads. Given that dynamic, and Romney’s inability at this point to fire up the base, we should expect a protracted Republican primary process that could resemble the Obama-Hillary fight in 2008. And in the end, I believe Romney will be the last man standing.

Jeff:  Don’t count Uncle Newt out yet, Tony. 

The media loves a comeback story and Newt Gingrich is providing that just at the right time.  One month from the Iowa Caucuses, Newt is peaking at the right time in the “anybody but Romney sweepstakes.” 

I share a soft spot for Newt Gingrich because of my own experience in the mid-1990s.  As all will recall, it was Newt Gingrich that master minded the historic House Republican Revolution of 1994.  That year, House Speaker Tom Foley and the 50-year Democratic Majority was washed away by that historic election; two years later my first boss, a young state senator named Adam Smith, defeated a Newt Gingrich freshman. 

Tony is correct, that we can expect a long Republican primary because the conservative base has not yet bought into the Romney campaign.  More importantly, the media wants and needs to have a bruising primary to keep us interested in the reality TV aspect of the presidential race.  There is an insatiable need for ongoing new media content.  Newt Gingrich will benefit from the media wanting a competition to drive interest and ratings.

Regardless of which Republican wins the party nomination, it is going to be a very competitive general election.  As a former men’s college basketball referee, I can say that the general election campaign will be “jump ball” all the way to the end.  I still believe President Obama will win re-election because every poll still shows that people personally like him, even though his job approval ratings are not good in key swing states.  More to come…

D.C. LEGISLATIVE UPDATE

Congress Sprinting to End of 2011 Session

Congress is in last couple weeks of the 2011 session.  It has a long list of bills to pass, but the action we can probably be most sure of is the recess date of December 16.  Members are in no mood to stick around.

One of the most critical items is the extension of funding for federal agencies into 2012.  Current funding authority for most agencies expires on December 16.  Nine of the twelve appropriations bills are outstanding.  Congress will almost certainly need to extend funding into early 2012 and finish the bills then.

Last week the Senate completed one of its wish list items, the Defense Authorization bill, but rejected plans to extend payroll tax relief beyond 2011.  They’ll revisit the issue in coming weeks.

Congress is also trying to extend federal unemployment compensation, prevent a scheduled reduction in Medicare payments to health care providers and prevent a national rail strike.

Each Chamber also continues to work on a variety of other issues, including regulatory reform and Administration nominations.

Appropriations

It’s crunch time for congressional appropriators hoping to finish up the annual funding process before heading back to their home states and districts for the holidays.  A minibus including funding for the Departments of Agriculture, Commerce-Justice-Science, and Transportation-HUD passed just before Thanksgiving.  Included in the minibus was stopgap funding for the rest of the agencies which expires December 16th.  Appropriators are now working to develop an omnibus that combines the remaining nine appropriations bills.

After losing more than 100+ Republican votes on the mini-bus bill because of concerns about spending levels, congressional leaders will need to develop a compromise that garners enough Democrat support to pass the bill in the House.  Additionally, policy riders in the Labor, Health and Human Services bill and in the Interior and Environment bills are reported roadblocks to a final compromise.  Language needs to be ready to go by the 12th under House rules in order for Congress to finish by the 16th.

The minibus that passed includes $128.1 billion in spending that is subject to the previously agreed to $1.043 trillion cap.  The Agriculture bill includes $19.8 billion, a $350 million reduction over last year’s funding level.  Highlights of the Ag bill can be found here: http://www.appropriations.senate.gov/news.cfm?method=news.view&id=d07b2497-7e6f-46e4-a2b1-b0ead0dfbecb

Spending for Commerce-Justice-Science comes in at $52.7 billion, $583 million less than last year.  A summary is here: http://www.appropriations.senate.gov/news.cfm?method=news.view&id=b8ff1f5c-8b09-4388-a403-7718b276b4d6.  The Community Oriented Policing Program (COPS) was funded in the conference report at $199 million, although it is a 60% reduction of funds from last year it is a reprieve from the House proposal which provided no funding for the account.

Lastly, the only bill to get an increase over FY11 was Transportation-HUD.  Included in the bill is $500 million for the popular TIGER grant program targeted toward significant transportation projects.  Highlights of the bill are here: http://www.appropriations.senate.gov/news.cfm?method=news.view&id=c78db30e-c1eb-4f8a-bedb-748c29cb0426

For those of you interested in the bill or report the link is here:

http://www.rules.house.gov/Legislation/legislationDetails.aspx?NewsID=601

Super Committee Fails - What's Next?

Congress's Joint Select Committee on Deficit Reduction (a.k.a the "Super Committee") was unable to reach agreement for cutting the federal deficit.  That triggers a “sequestration” - across-the-board cuts of about $1.2 trillion over 10 years beginning in 2013.  The cuts are to be divided equally between defense spending and non-defense spending.  A few programs are exempt such as Social Security, Medicaid and food stamps, while cuts to Medicare are capped at 2 percent.2 percent.

What happens next?  Either Congress enacts a trillion-dollar-plus-combination of spending cuts and revenue increases in 2012, or sequestration occurs in early 2013.

Most Democrats don’t want the heavy sequestration cuts to social programs such as housing and education, while most Republicans don’t want the heavy sequestration cuts to defense.  You might think that would spur Congress to strike a deal, but that will be exceptionally difficult in a Presidential and congressional election year that will be interrupted with primaries.  Or you might think Congress would simply pass a law reversing the automatic cuts.  That probably is a non-starter with the public. Members are already drafting bills to protect particular programs, like defense, from automatic deep cuts.  But President Obama has said he would not sign such legislation.

It will likely be early 2012 before we get a clearer idea of what this means for fiscal year 2013 appropriations, and pending authorization bills.  Do Appropriations committees pass budgets to conform to the sequestration?  Or budgets with “normal” cuts?  Do Authorizing committees pass legislation, such as the farm and transportation bills – to conform with sequestration?  Any bill that passes that doesn’t conform would likely have to be reopened in 2013.  Authorizing committees may just punt to 2013.

We’ll be watching this very carefully to ensure we can advise you of the best strategy moving forward.

Transportation

It’s been an eventful few weeks in transportation. 

Authorization: First, there was movement on an authorization bill to replace SAFETEA-LU.  However we’re still looking at February or March of 2012 as the earliest a bill could pass, with most stakeholders still expecting it will be 2013 before a bill passes.

The Senate Environment and Public Works Committee unanimously passed the highways section of a proposed two-year authorization bill.  Known as MAP-21 (Moving Ahead for Progress in the 21st Century) the bill would provide about $58 billion annually.  The overall bill's funding sources are not yet fully identified. Stakeholders are hoping the transit section (Banking Committee) and the rail and safety sections (Commerce Committee) will be acted on before December 16 when Congress is scheduled to adjourn for the year.  It is highly unlikely that the Finance Committee will act on the funding section this year.  Here’s a summary and text of the bill (without the committee-adopted amendments).

House Transportation Committee Chair Rep. John Mica announced his committee, and the full House, would act on its authorization proposal in early 2012.  We think that early February is the earliest we’ll see bill text.  House Leadership previously announced in mid-November that it would act in December, but the bill fell victim to other pressing legislative items.  The transportation proposal will be combined with legislation to expand energy production, such as oil drilling.  Few other details were released. Republicans have published a 22-page summary of their transportation proposal.

SAFETEA-LU expires on March 31, 2012.

2012 Appropriations:  The 2012 Transportation Appropriations bill was signed into law, and USDOT is now funded through September 30, 2012.  Highways funding is essentially even with 2011 funding levels.  The key provisions: The TIGER grant program is renewed at $500 million, high speed rail grants are eliminated, and no funding was provided for an infrastructure bank. 

Federal Aviation Administration authorization: Senate and House Committee leaders have met several times recently but no resolution was worked out.  The legislative authorization has been extended 22 times since expiring in 2007.

Sequestration:  Most transportation programs are exempted from the across-the-board cuts which are scheduled to be implemented beginning in 2013.  That’s because most programs are funded through the Highway Trust Fund which has dedicated revenue sources – and there’s a loophole in the governing legislation regarding dedicated revenue.  Notable programs subject to sequestration are the New Starts, and passenger rail programs.  Note: it is still possible – and probably likely – that funding for the exempt programs could be reduced.  Congress can do that through the appropriations process, or by amending the governing legislation (Budget Control Act).  It would difficult for Congress to preserve transportation funding while cutting defense, education and housing, and other social service programs.

USDOT programs not subject to automatic across-the-board cuts:

Highways

FHWA - Bridge Replacement & Rehabilitation

Congestion Mitigation & Air Quality

Coordinated Border Infrastructure Program

Equity Bonus

High Priority Projects

Highway Safety Improvement

Interstate Maintenance

Metropolitan Planning

National Highway System

Railway Highway Crossings

Safe Routes to School

Surface Transportation Program

State & Community Highway Safety

Mass Transit

FTA - Bus and Bus Facilities

Capital Assistance for the Elderly and Disabled

Fixed Guideway Modernization

Job Access and Reverse Commute

Nonurbanized Area Formula

Urbanized Area Formula

===============================================================================================================

W2A UPDATE: SEPTEMBER 15, 2011

Congress returned last week from the August recess and a great deal of legislative work has been underway, especially on the budget/appropriations fronts.  Despite the rush to move several appropriations measures, there is no way Congress will meet the fiscal year deadline so continuing resolution (CR) proposals are already in the works to fund the government beyond the October 1 start of fiscal year 2012.  Expect the House to take up its CR measure perhaps as early as next week.  The Senate will likely follow closely behind.  Currently, both the House and Senate are scheduled to be in recess the last week of September. 

Below is a summary of the key political and legislative issues we have been tracking. 

WA STATE POLITICAL NEWS

The Washington State Redistricting Commission has released four draft proposals for redrawing congressional and state legislative district boundaries.  The U.S. and state constitutions require that boundaries be adjusted every 10 years to reflect population growth and shifts.  The four members — two Democrats and two Republicans — must agree on a final map by January 1.

New congressional boundaries are complicated because the State gained a new (10th) Congressional District as a result of the state's population growth.  The new district will be shoehorned into Western Washington, somewhere between Thurston and Snohomish counties.

Three of the four proposals create a “majority-minority” congressional district in the Seattle/King county area.  And three proposals place the new 10th District very differently.   One has the new 10th District covering much of the Olympic peninsula; another has it concentrated south of Seattle, and another would spread it from the San Juan Islands to Chelan.

And all four plans alter the 3rd Congressional District in SW Washington.  The Longview Daily News notes that the district “likely would become more Republican…. All four proposals would lop off most of Thurston County, a traditional Democratic stronghold, from the north end of the 3rd District.” There is speculation that two of the maps have drawn a district that would be favorable to recent Democratic Congressional candidate Denny Heck.

Advocacy in 2012 and beyond will be impacted by the final maps.  That’s because at least some congressional and state representatives will be residing in new districts, and some incumbents will have to run against each other.  We look forward to helping you navigate these changes.

To view and comment on the plans, click on this link.

D.C. LEGISLATIVE UPDATE

The President’s Jobs Proposal

“Pass this jobs bill” or “pass it right away” became a familiar phrase to those of us listening to the President’s speech to a Joint Session of Congress last week.  (We counted 16 times.)  The $477 billion plan includes everything from teacher retention money, employee tax breaks, roads and airport money, unemployment extension and reform, to employer tax incentives.  The President noted that many of the proposals in his bill have had, at one time or another, support from both sides of the aisle. 

The response from Republicans on the Hill have trickled out over the week as more details have become available – from an almost conciliatory tone from House Majority Leader Eric Cantor and House Speaker John Boehner would look for common ground with the President to Senate Minority Leader Mitch McConnell’s much more pointed rejection of the President’s plan, objecting to the tax increases and calling it “temporary proposals and half measures.”  

There is plenty to like and dislike for everybody in the bill; from those who argue the spending on infrastructure and teachers did little to spur the economy last time around to those concerned about the impact to the Social Security trust fund when social security taxes are cut. 

Tax breaks for employees and employers outlined by the President seem to have the most bipartisan support – even with House conservatives beginning to raise objections.  That said, it remains to be seen in the run up to a Presidential election, what can be accomplished.  What is almost certain is the plan will not pass as a comprehensive package.  In the meantime, Senate Majority Leader Reid is hoping to set aside floor time for the bill in early October and is reported asking Senate Committee Chairs to hold hearings on the pieces of the bill they have jurisdiction over.  Legislative details for the proposal were made available by the White House on Monday. 

Bill Language: http://www.whitehouse.gov/sites/default/files/American_Jobs_Act.pdf

Section-by-Section Summary: http://www.whitehouse.gov/sites/default/files/American_Jobs_Act_Sectional_Analysis.pdf

The offsets proposed by the President include limiting the itemized deductions for individuals making $200,000 and families at $250,000, changing numerous oil and gas company tax breaks, subjecting service partners to regular income tax rates instead of the capital gains tax rate, and reducing the depreciation period for corporate jets.  In some ways, the President has raised the bar for the Deficit Committee challenged already with finding $1.5 trillion in savings.  He proposes that if the Deficit Committee exceeds its target of $1.5 trillion to include the costs of the Jobs bill then the offsets he proposed will not take effect. 

Highlights of the President’s bill: 

• Payroll Taxes:  The centerpiece of the bill extends employer and employee payroll tax deductions and account for almost half of the plans $477 billion cost.
• Social Security tax relief:  Extends and expands the current social security tax break through 2012.  Employees would only pay 3.1% or half of their social security tax.  Employers also have their share of social security taxes reduced to 3.1%.  Although funds from general revenue would be transferred to the Social Security trust fund to cover losses, expect social security advocates and others to raise concern about protecting the trust fund. 

• Employer tax relief: In addition to reducing the employers’ share of social security tax, the bill eliminates taxes for new hires or increased wages.   Employers would receive a $4000 tax credit when hiring somebody unemployed for at least six months.
• Veterans Hiring:  Tax breaks for hiring veterans range from $2400 to $9600 if employers hire a veteran unemployed for six months and who has a service connected disability. 
• Teacher Rehiring: $30 billion to retain or rehire preschool, elementary, and secondary teachers.  States must apply for funds, and grants flow through states to local school districts within 90 days.
• First Responder Hiring:  $4 billion for the COPS program to retain or rehire law enforcement officers with the federal government picking up 100% of the cost and $1 billion for other first responder hiring programs.
• School Modernization:  $25 billion to modernize K-12 schools and $5 billion for community colleges.  The administration would target funds first to the 100 poorest school districts. 
• Unemployment Benefits & Reform: At a cost of $49 billion Obama extends unemployment benefits for another year. The bill also would overhaul the system following the models of Georgia and North Carolina where the unemployed engage in temporary, volunteer or work-based training.
• Transportation and Infrastructure:  $50 billion for traditional transportation programs at 100% federal costs share. 
• $2 billion for airports
• $27 billion for highways distributed by traditional state formulas
• $4 billion for High Speed Rail
• $2 billion for Amtrak
• $3 billion for transit and purchase of new buses
• $5 billion for TIGER. 
• $10 billionInfrastructure Bank: The President would establish the American Infrastructure Finance Authority and fund it at $10 billion.  AAIFA would provide loans, loan guarantees, and other financing mechanisms for public transportation, water, or energy infrastructure projects.
• Project Rebuild: $15 billion to focus on rehabbing foreclosed homes.
• Public Safety Broadband Corporation - $50 million to establish the Public Safety Broadband Corporation to promote the construction and development of a nationwide public safety network.   

Joint Select Committee on Deficit Reduction

By this time, we suspect most of you have read plenty about the Joint Select Committee on Deficit Reduction, the bipartisan committee established by the Budget Control Act tasked with finding $1.5 trillion in savings over the next ten years.  And, hard to miss that our state’s senior Senator Patty Murray will co-chair the panel.  The committee faces an enormous task but many expect members to look to the recent work of the Simpson-Bowles Commission, or proposals from the Gang of Six.  In fact many members of the Joint Committee are veterans of these discussions.  The key difference is that the Joint Committee is set up with the ability to write and report legislation and has broad jurisdiction over federal programs.  Through August the focus was mostly on organizational issues, rules of the committee, and hiring staff.  With the Senate’s return this week, the Committee held its first hearing on the “History and Drivers of the National Debt” with testimony from Director of the Congressional Budget Office. 

We thought it would be helpful to have key players, dates and a link to the new committee’s website as we watch the drama unfold over the next few months.  Committee Members:  The panel includes an equal number of Republicans and Democrats from the House and Senate.  Senate members include:  Patty Murray, Co-chair (D,WA), Max Baucus (D,MT), John Kerry (D,MA), Jon Kyl (R, AZ), Rob Portman (R,OH), and Pat Toomey (R,PA).  House Members:  Jeb Hensarling, Co-chair (R, TX), Fred Upton (R,MI), Dave Camp (R,MI), Xavier Becerra (D,CA), Jim Clyburn (D,SC), Chris Van Hollen (D, MD). 

Key Dates:

Oct. 14th  - Standing Committees report their recommendations

• November 23rd – Committee to produce recommendation
• Dec. 23rd  - House and Senate vote on proposal with no amendments
• Jan 15, 2012  - Enactment or $1.2 trillion in across the board cuts. 

The Committee’s website: http://deficitreduction.senate.gov/public/index.cfm/

Transportation

The recent weeks were busy on the federal transportation front.  First, President Obama in his jobs proposal requested $10 billion for an Infrastructure Bank and $50 billion for transportation infrastructure, divided as:

$27 billion for highways

  $9 billion for mass transit

  $4 billion for high-speed rail corridors

  $2 billion for other intercity passenger rail

  $5 billion for TIGER and TIFIA grant/loan assistance

  $2 billion for airport improvement grants

  $1 billion for next generation air traffic control

Many congressional Republicans and some Democrats oppose further investment in TIGER, and many congressional Republicans oppose more funding for passenger rail programs.  So, it’s unclear how those proposals will advance.  Support for the other programs likely will depend on the criteria for allocation the funds.

Here are two fact sheets on Obama’s proposal:

http://www.whitehouse.gov/the-press-office/2011/09/08/fact-sheet-american-jobs-act

http://www.whitehouse.gov/the-press-office/2011/09/08/fact-sheet-and-overview

Second, surprising most observers, Senate and House leadership reached an agreement late last Friday to renew SAFETEA-LU for six months, and aviation programs for four months.  Related taxes are also renewed.  SAFETEA-LU was set to expire as of October 1, while aviation programs were due to expire on September 16th.  The legislation was passed by the House and is expected to pass the Senate by Friday afternoon.

The deal removes (or at least postpones) the possibility of USDOT shutting down due to political disputes about funding, taxes and policy.  A similar dispute shut down aviation programs last month.  The agreement also provides some certainty for state and local agencies, enabling projects to advance.  But the lack of a full year or multi-year deal means a number of projects will still be in limbo, and longer-range planning remains problematic. 

SAFETEA-LU funding will be authorized at current levels, meaning about $25 billion for the next six months.  That could be a huge win for transportation stakeholders who were facing the likelihood of a nearly 37% cut for 2012.  The final funding levels for 2012 will be determined through the appropriations process later this year.

The agreement buys time for the Senate and House committees to complete the details of their bills to replace SAFETEA-LU.  But that doesn't mean we'll see detailed legislative text anytime soon, or committees passing bills.  Congress typically is more productive when faced with a deadline, and the deadline just moved another six months out.  But don’t expect this to change the very low odds of enacting multi-year bill in 2012.

Aviation

Aviation programs will be continued for four months.  The shorter extension period reflects that Congress is much closer to a final deal on an aviation bill than on a surface transportation bill.  Both Chambers have passed legislation but have not appointed negotiators to work out the final details.  The House and Senate remain significantly apart on two issues: union organizing rules, and rural airport subsidies.

The House Appropriation’s Transportation subcommittee passed its 2012 spending bill, but the full committee has yet to act.  The Senate Appropriation’s Transportation subcommittee is tentatively scheduled to act on its bill in the coming week.  As noted elsewhere, we anticipate a continuing resolution will be passed, and will govern transportation spending for a short period of FY 2012.

Water Resources

In July the House passed out the Energy and Water appropriations bills (HR 2354).  On September 7th the Senate Appropriations Committee passed out its version of the bill.  The Senate’s FY 2012 proposal increases funding to the Corps by $20 million over FY 2011 levels and $96 million over the House proposal. 

The Senate has proposed a boosts to the account for General Investigations (GI) to $125 million.  The administration and House proposed $104 million for General Investigations.  Like the House bill, the Senate provides funds for “additional investigations” not listed in the administration’s budget to be used for on-going work to, “…accelerate high priority flood control, storm damage reduction, navigation, and environmental restoration studies.”  (Senate Report 112-75, Energy & Water Appropriations, pg. 28)  The specific expenditure of these funds is left to the administration’s discretion. 

The Senate Report includes great charts comparing House, Senate and administration funding proposals for the Corps.  New starts are not funded in the Senate bill. 

Financial Services

The Senate Appropriation Committee this week passed a draft FY 2012 spending bill that boosts funding to financial regulators.  The Senate bill provides $1.4 billion for the Security and Exchange Commission (SEC), an increase of $222 million more than FY 2011.  It provides $240 million to the Commodity Futures Trading Commission (CFTC), an increase of $37.7 million above FY 2011 levels. 

Senator Durbin (D, Il) the Chairman of the Financial Services and General Government Appropriations Subcommittee, expressed that it was his top priority to give the SEC and CFTC the funding it needs to take on additional responsibilities enacted under Dodd-Frank.  (CQ Today, Sept. 14, 2011)

Perhaps one of the most interesting bits of financial service news of the week was the announcement by Elizabeth Warren that she is jumping into the race against freshmen Senator Scott Brown for the Massachusetts U.S. Senate seat.  Ms. Warren will need to first beat out several Democratic candidates who have been campaigning for months already but Ms. Warren’s candidacy is propelled by what is expected to be a strong fundraising capacity and a national following.

=============================================================================================

W2A UPDATE: AUGUST 8, 2011

In this edition of the W2A Update, Tony and Jeff provide some thoughts and commentary on what took place in our nation’s capital over the increase in the debt limit and what it all means for the rest of this year and beyond.  A few other legislative updates follow. 

OUR TAKE

Tony’s Take – Expect more high blood pressure moments.

Before we get to what’s happening in Washington, D.C., let’s start with the most important news from my perspective:  my son, Joshua, came home on Saturday night.

Just 15 days after open heart surgery, Cindi, Joshua and I boarded Alaska #3 and flew home to Seattle from D.C.  It was a huge moment for our family and, of course, for our dear son, Joshua. His heart surgery was a complete success and he is recovering well.  His surgeon put in a pulmonary valve and did some tune-up work.  While the first couple days of recovery were harrowing, Joshua is doing very well now and we are optimistic that he will start school on time in September.

No one I know deserves a clean bill of health more than Joshua.  He is an amazing little boy and has been a miracle from birth.  When he was born he was given little chance for survival and, yet, here he is on the cusp of being a teenager.  He has endured so much pain and so many challenges in his young life and he never loses his fighting spirit.  He is one courageous and inspiring little boy and I feel blessed to be his father (even when he hogs the remote).

Joshua’s original surgeon, Dr. Richard Jonas, did the second surgery and did his usual amazing job.  Dr. Jonas is one of the top pediatric cardiac surgeons in the world (the heart and kidney ward was a mini United Nations with patients coming from all over the world to seek his help), and we feel blessed to have him in our lives.  Dr. Jonas is generally a pretty quiet and reserved guy, but he had an absolute joyous look on his face as he monitored Joshua’s amazing recovery.

Finally, I must thank all of you for your grace, prayers, good thoughts and kindness.  Yes, we are in business together and, yes, we have our jobs to do and, yes, I very much appreciate that we can take a few moments to share a little bit

about our personal lives with each other.  I think that makes us better teammates when we have tough challenges to sort out, process and achieve.  I have a full folder of emails and personal notes that I will answer individually during the next few weeks, so, for now, I will just say thank you.  I appreciate you all so very much.

OK, and for now for the clunkiest transition ever – how ‘bout the last two weeks in Washington, D.C.?!?  In the end, I guess I will take some solace that our predictions to you were correct:  Congress and the President avoided a calamity by increasing the debt ceiling within hours of the deadline.  Hooray.

Unfortunately, I am expecting us to have more high blood pressure moments in the coming months, and thanks to the deal that was negotiated, we should begin preparing for our Christmas season to be interrupted by our “friends” in Washington, D.C.  Over the next few months the newly created deficit reduction super committee will attempt to put together another package of cuts and potential revenue increases.  While they do that, we can expect more intense fighting and deadline missing by our leaders in D.C., and it’s really unclear at this point how the year will end and what Congress will ultimately accomplish when we break for the holidays.

Here at W2A, we are preparing for all kinds of outcomes – passage of authorization legislation, passage of some appropriations bills, an end-of-the-year omnibus spending bill, a big budget package and other possibilities.  Of course, any of these outcomes could also provide opportunities to pass legislation that is non-controversial and not terribly complicated.  Or we could end the year in a total standstill.

With approval ratings plummeting for both Congress and the President, my advice to our leaders in Congress is to grow up, and do some things that lower the national blood pressure vs. the high blood pressure strategies they have been employing the last several months (years?).  Sadly, I’m guessing that my advice will largely be ignored.

Jeff’s Take - The high humidity and heat must be making folks loopy in D.C…

That is the only rational explanation for the increasingly high level of partisanship in our Nation’s Capitol.  Tony correctly points out that we can expect more “high blood pressure” moments for the remainder of this year in D.C.  As you all know, a debt ceiling deal was reached, but the next scene in this movie will take place at the end of September.  That is the last day of the annual federal fiscal year and will require the Congress to pass legislation to keep funding government operations.  Expect to hear the phrase “threat of a government shut down,” a few times starting right after Labor Day weekend.

After a government shutdown fight, the end of year headlines will focus on the so called “SUPER COMMITTEE” that was just established to find a package of deficit reductions and revenue enhancements by December.  If Congress cannot agree to a package of deficit reductions measures an automatic $1.2 trillion in domestic and defense cuts will be implemented.

Of course, all of this deficit and debt debate is layered on top of a fragile economy, which has dramatically impacted the financial markets the past two weeks.  There are no easy answers for policy makers, regardless of their party/philosophical view, but one thing is clear - the American public is completely fed up with Congress.  In a recent CBS poll a whopping 82% of the American public disapproves of the job the Congress is doing.  Ironically, as the internet and explosion of cable networks has given normal Americans more transparency into Congress, it has also increased their view of the ugly sausage making process that is our great Democracy.  I think it is important to remember that 99.9% of all lawmaker do care about their country and they want to solve problems.  The real question is will they compromise on the big issues to move the country forward.  More to come…and enjoy the remainder of the summer. 

D.C. LEGISLATIVE UPDATE

Budget – Debt Deal

Congress and the White House reached a deal on the debt limit and federal spending.  Formally known as “Budget Control Act of 2011”, the bill was approved 74-26 by the Senate, and 269-161 by the House.  The agreement raises the debt ceiling in exchange for $2.1 trillion in deficit cuts over a decade.  It also includes a set of deadlines, triggers automatic spending cuts and requires a congressional vote on a balanced budget amendment.

The deal also establishes a 12-member Joint Congressional Committee, whose members will be appointed by the majority and minority leaders from the House and Senate.  This “Super Committee” must by Thanksgiving identify $1.2 trillion to $1.5 trillion in budget cuts over the next decade.  Congress will have until Christmas to vote on the recommendations.

If the committee fails to act by Thanksgiving, or if Congress doesn't approve their recommendations by an up-or-down vote by Christmas, it will trigger a $1.2 trillion across-the-board cut split equally between domestic and military spending.

The Committee’s work will be a replay of the debt negotiations.  Democrats will insist on some revenue increases to accompany spending cuts, and Republicans will oppose revenue increases and focus more on spending reductions.  But both will be motivated strongly to strike a deal because the alternative (the $1.2 trillion automatic cuts) is even less acceptable to both sides.

Politico published a good short summary (“What's in the debt ceiling bill”), a longer article about the deal and how it came together (“ 'We have a deal' ”), and summarized opinions from major newspaper editorial boards in (“Editorial pages cheer, jeer deal”).

The Washington Post collected opinions from a diverse group of political and financial insiders about the deal, and the winners and losers, in “Topic A: Who won and lost in the debt deal?”

Transportation

Congress recessed for August without taking action on a surface transportation bill.  On October 1st the current legislation, which includes authority to levy and collect the gas tax, expires.  Some transportation stakeholders are concerned that the expiring gas tax may be the next big political battle, similar to the recent FAA battle (Expiring gas tax may be next battle on the Hill, Politico).

Senate Majority Leader Harry Reid has called on the Senate to act on its proposal in September. However, there are very few legislative days left for the full Senate and House to debate and vote on a multi-year transportation bill.  Look for bills to possibly pass out of committee in September, but then die for lack of further action.  Many stakeholders expect a two year extension of current legislation, or a new two-year bill containing less funding and few if any reforms.  Another strong possibility is an extension through spring 2012.

House Transportation Committee Republicans released a 22-page summary of their authorization proposal, a six-year bill funded at about $38 billion annually.  Senators Boxer and Inhofe released their bipartisan outline of legislation to replace SAFETEA-LU.  The two-year bill provides about $54.5 billion annually.  SAFETEA-LU provided about $48.8 billion annually, and was supplemented with general funds.

Federal Aviation Administration

This time the 21st short-term extension of the Federal Aviation Administration (FAA) bill thrust negotiations into the national spotlight and caused a partial shutdown of the FAA operations. What’s all the fuss?  Twenty extensions of the FAA’s authority to collect and spend airline taxes have passed since 2007, and this year, both House and Senate have passed new authorizing bills for the FAA.

This time the short-term extension passed by the House included provisions that would remove subsidies for rural airports – one of the key provisions that is keeping the two sides a part on the long-term authorization.  The provision would remove subsidies for rural airports that are more than 90 miles away from a medium or large airport hub.  Senate Democrats wanted a clean extension.

The two sides dug in and authority for the FAA to collect taxes ran out on July 22nd.  The result was ugly all around -- about 4,000 FAA employees were furloughed, 200 capital projects at airports were suspended and the government lost about $25 million per day in tax revenue.  Add to that the political fallout from Congress leaving for August recess without an agreement in hand and the backlash that is bound to come the airlines way as some chose to raise ticket prices and pocket the extra cash since they weren’t required to collect the taxes.  

Secretary LaHood and Senator Rockerfeller (D, WV), Chairman of the Senate Commerce Committee, have both noted they are working on ways to recapture that lost revenue.  Last Friday, the Senate agreed to the House extension with inclusion of a provision that allows the Secretary of Transportation to provide a waiver to communities that would be impacted by the new rule on Essential Air Service.  The authorization lasts until September 16th , which gives Congress just about a week and a half to either finish up the long-term authorization or come to an agreement on another – the 22nd – short-term extension.

========================================================================

W2A UPDATE: Debt Limit Special -- July 15, 2011

Tony’s Take – This week in D.C.

I was in D.C. this week and got a firsthand look at what’s happening with the debt limit and other issues of importance.  Here are my reflections on the week:

• There will be an agreement to increase the debt limit, and it will be done before the August 2nd deadline. 
• It’s still very unclear what the final package of accompanying spending cuts and revenues increases will be.
• The news media loves the drama here and will do all it can to keep everyone’s blood pressure as high as possible.
• Yes, everyone is cranky, especially the folks most involved in the ongoing negotiations.   They all know that they really must be in this together in order to get something done,  and the more time they spend together, the less they like each other.
• Rank-and-file Members in the House are beginning to process what a potential deal might look like.  I was talking privately about all of this with one Member of our congressional delegation this week just a short while after they had learned many of the details in the proposed package, and I could tell that this particular Member was literally processing the magnitude of the deal as they were talking with me about the whole subject. Let’s just say it wasn’t the most focused conversation I’ve ever had with this particular Member.
• Basic human nature is now at work.  The rank-and-file Members have been watching this whole thing from the sidelines, and they have been only nominally more knowledgeable about the process than the rest of us.  Earlier this week, they got some details about what a deal might look like, and they all basically (especially conservative R’s) went bonkers. 
• A few other thoughts about this subject to keep in mind over the next two weeks:
• When it comes to the political clock, August 2nd is still a long, long ways away.
• Congress pretty much doesn’t do anything these days until it absolutely has to, so don’t expect something to happen quickly here, and expect any deal to be completed in the final hours before the actual deadline.
• My gut says that House Majority Leader Eric Cantor is overexposed right now, which makes me question his skills as a big national leader.  I feel a “balloon popping” moment coming soon for him, especially given the growing tension between him and Speaker Boehner, and his enjoyment at getting “called out” by President Obama the other night.
• Is Nancy Pelosi still in Congress?

For now, that’s what we know about the debt limit – the pressure is on, everyone knows they must do something, no one wants to do anything, and in the end, they will do something that averts the crisis because that’s just what they do in these situations.  We will continue to follow this closely, and will give you updates as things develop in the coming days and weeks.

A few more things to note from this week’s trip to D.C:

• Yes, it’s really, really hot back there this time of year, but when it comes to visiting the nation’s capital for business, this is, by far, the best time of year to make such trips.
• My most productive trips come in the summer months.  The crowds are lower because it’s so hot and humid, and people across America have less time to make business trips to D.C. because they are busy vacationing with their own families. The result for those of us who still make the trek is that the staff and Members have more time for meetings, they are generally more relaxed during the meetings, and it’s easier to get around the Capitol campus because the security lines are generally short and sweet (except for the family of seven that squeezed in front of me one morning. Doh!)
• Oh yes, and I got a great hotel rate ($269) and an upgrade from a regular room to a nice executive suite because the hotel wasn’t packed to the gills with business travelers.
• So, go ahead, keep to the schedule that works for you, but do keep in mind that summer is generally a “higher value” time to visit to D.C. for the reasons I mention above than late winter through spring.
• On the non-debt limit front, it is really, really quiet when it comes to legislation.  The House’s big bill for the week was deciding whether America should get rid of regular light bulbs in favor of those newfangled curly-fry-looking light bulbs that use less electricity.  Wow, big stuff.
• Also, campaign finance reports are due today, and I can assure you that even in the midst of this debt crisis, the politicians are still raising money.  I had two Members of Congress and two Chiefs of Staff tell me this week how happy they were with their second quarter fund-raising totals.  After that, we talked about what was going on with the debt limit.
• And, lastly, I had three people pull me aside this week to ask if they could get together with me soon to talk about life outside D.C.  This now happens to me all the time, and is a reflection of how weary people on the Hill are getting about life in D.C.

From Tony -- A Personal Note to our Friends and Clients

Before I close, I need to let you all know about something personal that will keep me “off the grid” for big chunks of the next few weeks.  Next Friday, July 22nd, my oldest son, Joshua (12), will have open heart surgery in Washington, D.C. at Children’s Hospital.  Joshua was born without a pulmonary valve in his heart and has a number of other disabilities.  When he was born, doctors gave him little chance to live, and did open heart surgery on him when he was a month old.  They were able to make his heart work, and told us at the time that he would eventually need more surgery in order to put in a pulmonary valve.

Well, that day has finally come, and my little miracle boy will need to go under the knife once more, which, as you can imagine, is not an experience that Cindi and I had hoped to live through again.  For now, I can tell you that I am going to stop working on Thursday, July 21st at noon, and I hope to be back in action on Monday, August 1st.  If things go well, I might be back earlier than that, and if things are difficult, it could be longer.  While I’m away, my colleagues will be here to help you with anything that you might need from me.

And, yes, Cindi, Joshua, Jacob (our 7 year-old) and I will deeply treasure your prayers and good thoughts over the next couple of weeks.

END

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

2A UPDATE - July 1, 2011

Happy July!  The fireworks are already flying here at Washington2 Advocates (W2A) with Tony and Jeff having a grand time throwing political jabs at one another.  The anticipation of the 2012 elections is already in the air.  Enjoy a taste of what the boys are dishing up in this month’s version of Our Take, where Tony and Jeff spar over President Obama’s “vulnerability”.  Our regular DC Legislative Update follows.  If you ever want more details on any of the legislative issues we cover please don’t hesitate to contact any of us.  If you want to take on Tony and Jeff’s political insights, we welcome that anytime.  Enjoy and hope you have a wonderful 4th of July.

OUR TAKE:  Can President Obama be beaten in 2012?

TONY

Can President Obama be beaten in 2012?  I get that question now all the time from friends and clients (said, almost in a whisper).  My answer is always the same...not only will the President have a very tough re-election campaign, there is a very real chance he will lose next year.

The signs are all out there right now that President Obama is going to be a one-term President.  The official national unemployment rate is at 9 percent, and doesn’t seem to be on a downward trajectory anytime soon.

Then there are the polls – the President’s job approval rating has consistently been under 50 percent for two years (except for a brief spike following the killing of Bin Laden) and currently stands at 45 percent.  On the economy, just 37 percent approve of his work, and just 36 percent of Americans say they will definitely vote for Obama next year while 43 percent of Americans say they will definitely not vote for Obama.

One other interesting statistic comes to me from a friend in the money management business.  He notes that no President has been re-elected, nor has any incumbent party kept the White House, when the Consumer Confidence Index (CCI) has dropped below 100.  In January, the CCI was at 64.8 and it’s now down to 58.5.  In 1976, when Ford lost, the CCI was 87.1; in 1980, when Carter lost, it was 84.2; in 1992, when Bush lost, it was 54.6; and in 2008, when the Obama took the White House from the Republicans it was 38.8 (ouch). 

In other words, the President actually starts his campaign in a hole, and he will have to work very hard to climb out of it. 

The challenge for the Republicans starts with their candidate field, which to-date isn’t knocking the socks off of most activists and donors.  My view right now is that it’s Romney vs. the Palin/Bachmann/Perry (Governor of Texas) wing of the party.  Perhaps, Pawlenty or Huntsman could challenge Romney, but with each passing day that seems less likely.

I also have this feeling that some other candidate could still jump in late and put a charge in the race (Gov. Christie of New Jersey?), but that entry needs to happen soon in order to be successful.

Still, politics is a fast-changing “business”.  In 2009, no one gave the R’s a chance of winning back the House, and look what happened just one year later.  Next year, any Republican starts with 175 electoral votes (McCain’s 2008 total), and there are several states that could tip from Obama (North Carolina, Virginia, Florida, Indiana, New Hampshire, Ohio, Colorado, New Mexico and Nevada).  The Republicans just need to run about 10 strong campaigns next year to take back the White House – one strong national campaign, and strong campaigns in key states where the President is on the defensive.

Can it be done?  Sure it can.

Will it be done?  Ask me after the Iowa caucus, and the early primaries in February. 

JEFF

I think Chairman Tony Williams needs to take a summer vacation with his wonderful family if he thinks “there is a very real chance he (President Obama) will lose next year.”  Of course, any elected official can lose re-election; that is the greatness of our American Democracy.  For baseball fans, I would say that the Republicans are in spring training mode where hope springs eternal that their team is going to win the World Series in the fall of 2012. 

Tony correctly points out the historical challenge that President Obama faces given the persistent unemployment rate and the lingering anger and fear that all Americans feel after the Great Recession.  But, there are some key reasons why President Obama will be tough to defeat even in the face of a struggling economy: 

• The Obama Get Out the Vote operation is the best in history.  In 2008, candidate Senator Barack Obama was able to inspire new and young voters to vote.  He will do that again and it will help his chances to win re-election. 

• Fundraising is important to get your voters out and message out.  President Obama’s campaign will raise a record $1 billion dollars for the re-election effort.  That is a huge number.

• The unemployment rate does not need to go down dramatically for President Obama to win, it just needs to be trending in the correct way by the fall of 2012.  If there are a series of months of 200,000 to 300,000 new jobs created in the summer of 2012, that will help President Obama show voters that they should keep him in office for a 2nd term. 

• Republicans must sort out their nominee and give voters a good alternative to President Obama.  Presidential campaigns are about a choice, and it is important the Republicans select a good alternative to President Obama.  Historically speaking, recall that in the summer of 1995, President Bill Clinton was considered a potential one-term President after the 1994 Republican Revolution in Congress.  Two things happened, President Clinton ran a very smart “Bridge to the 21st Century campaign,” and the Republicans took a while to embrace Senator Bob Dole as their nominee.  Democrats had a similar situation in 2004 when it took a while to embrace Senator John Kerry as their nominee. 

More to come after the Iowa Caucuses in February 2012…

LEGISLATIVE UPDATE 

UDGET

The White House and congressional leaders continue to negotiate a budget deal focused on securing bipartisan support for increasing the federal debt limit.  The current debt limit is $14.3 trillion, and government borrowing authority is projected to run out on August 2.  Some financial experts are concerned that a federal default could cause great economic turmoil.  The projected deficit for 2012 is $1.5 trillion, and is projected to be nearly $7 trillion over the next decade. 

The President and Democratic leadership want some revenue increases – tax increases and/or elimination of some tax breaks, along with spending cuts.  Republican leadership is rejecting revenue increases as a part of any deal.  Negotiations continue to take many twists and turns.  Earlier this week the President met separately with congressional leaders from both parties to explore elements of a compromise deal.  Some Republicans have suggested they would rather support steeper defense cuts than support revenue increases.  The previous week Republicans pulled out of bipartisan negotiations with Vice President Biden.  The Biden group has been trying to reach an agreement that would cut deficits by at least $4 trillion over 10 years.

012 Appropriations

In late May the Senate Budget Committee Chair announced that work on the 2012 budget would be postponed until Congress and the White House reached agreement on the debt and spending issues.  Although it has not established an overall spending cap for the fiscal year through the normal budget process, the Senate has started working on the 2012 appropriations bills.  The first bill up is the Military Construction-VA bill, probably the least controversial of the 12 annual spending bills.  

The House has passed three bills so far: Military Construction-VA (HR 2055), Homeland Security (HR 2017) and Agriculture (HR 2112).  House appropriators are aiming to pass all 12 regular spending bills before the fiscal year, which starts Oct. 1.  Republican leaders have set a tentative goal of cutting federal spending by $30 billion for fiscal 2012.

Senate-House negotiations on final spending bills are likely to be as contentious as last year, when a final agreement wasn’t reached until April – seven months into the fiscal year.

Senate EPW and House Transportation leaders independently announced they plan to publish draft legislation and hold hearings on the next surface transportation bill during mid –to-late July.  That target date already has slipped several times so it’s uncertain if the July target will be met.  The House's tentative summer legislative schedule does not include action on a transportation bill, though Transportation Committee chair John Mica (R, FL) continues to press leaders to include the bill.

The two draft bills are likely to differ significantly in several important areas.  The Senate bill will almost certainly provide more funding overall and include more funding for transit, and continue funding for bicycle-pedestrian programs.  Four key Senators (two from each party) recently published a Statement of Principles guiding the drafting of the Senate bill.

The House bill will likely provide less overall funding, less funding for transit and will reduce, if not eliminate, funding for bicycle-pedestrian programs.  The current legislation, SAFETEA-LU, is extended until October 1, 2011.  The authorization has been extended seven times since expiring in October 2009.

The TIGER III (Transportation Investment Generating Economic Recovery) grant program criteria and application directions were published by USDOT today (July 1st).  The 2011 budget provides nearly $527 million for grants and financing of projects.  Preliminary applications are due October 3, 2011 by 5 p.m. (Eastern), and final applications will be due October 31.  See Notice of Available Funding. 

The House is scheduled to hold hearings on the FY 2012 transportation appropriations legislation in late July. 

FAA REAUTHORIZATION

20 and counting……  The House and Senate recently approved the 20th extension of the FAA authorization language so that the FAA has the authority to continue operations until July 22nd.  The short-term measure is intended to buy a little more time for the House and Senate Conference Committee to agree on new authorizing legislation.  Some of the outstanding issues are the length and funding levels of the authorization – the Senate at two years and $34.5 billion, the House at four years and 59.7 billion; the National Labor Relations Board language in the House bill – which has drawn a veto threat; and the number of flights into Reagan National airport from western states.  We are guessing a few of our readers wouldn’t be disappointed if there were a few more non-stops from Seattle into Reagan in the near future.

er Resources

The Water Resources Development Act (WRDA) authorization continues to languish.  The Senate Environment and Public Works committee has accepted project funding requests from members, but appears now to be focusing on other bills.  Few people believe a bill will pass before 2013.  The last bill passed in 2007, and the previous bill passed seven years earlier.

In June, the House Appropriations Committee passed the FY 2012 Energy & Water Appropriations bill not once but TWICE, due to scoring issues raised by CBO over the inclusion of $1 billion in emergency funds provided to the Corps of Engineers for states across the South and Midwest that were hit hard by tornadoes, floods and storms this year.  In the end, the House Energy & Water Appropriations bill remains unchanged – it provides $30.6 billion in FY 2012, a more than $1 billion reduction from FY 21011 levels and $5.9 billion less than the administration’s request.  The Army Corp of Engineers will receive $4.8 billion, a decrease of $89 million from FY 2011 levels but $195 million above the administration’s request.  The Department of Energy will receive $24.7 billion, which includes $1.3 billion for energy efficiency and renewable energy programs and $477 million for fossil energy research and development. 

FINANCIAL SERVICES

In both the House and Senate, Financial Services committee activity is inching along and both chambers are considering key appropriations measures. 

Financial services committees in the House have been very active in the last couple months.  In mid-May the House Financial Services Committee continued the pressure on the new Consumer Financial Protection Bureau (CFPB) by moving a measure (HR 1121) that would replace the director with a five-person commission.  The committee also approved a bill (HR 1667) that would require the agency’s director to be confirmed by the Senate before assuming its powers and it approved a measure (HR 1315) that would allow the Financial Services Oversight Council to overturn rules issued by the CFPB with a majority vote if those rules impact the “safety and soundness” of a financial institution.  Currently, a two-thirds vote is needed to overturn CFPB rules that impact the entire financial system, not just individual financial institutions. 

On June 23, the House Appropriations Committee moved a $19.9 billion FY 2012 Financial Services spending bill.  The bill is nine percent lower than FY 2011 levels and 22.5 percent lower than the administration’s request.  The bill was approved along party lines, with Republicans rejecting Democrat amendments to increase funding for agencies responsible for implementation of the Dodd-Frank Act. 

On the regulatory side, the CFTC, the SEC and other agencies with responsibility over Dodd-Frank implementation are moving quickly ahead with rulemaking, with many deadlines for comments to proposed rules and activity planned for the upcoming summer months.  The CFTC did reopen or extend the comment period for several proposed rulemakings and has requested comment also on the order in which it is considering final rules under Dodd-Frank.  See CFTC rulemaking list and deadlines.  See also the SEC’s schedule for Dodd-Frank implementation activity.  House Republicans continue to express concern over the speed at which rulemaking is taking place on Dodd-Frank measures.

TRADE

The momentum stalled on moving three pending trade agreements, as Senate Republicans didn’t attend a planned “mock markup” of the Columbia, Panama and South Korean Trade Promotion Agreements scheduled for Thursday.

Earlier this week Senate Finance Committee chair Max Baucus (D, MT) announced a deal that would allow the committee to move forward with a “mock markup” of implementing legislation for all three agreements.  The deal that had been cut between with the White House, House Ways and Means chair David Camp (R, MI) and Baucus included extending the authorization of the Trade Adjustment Assistance (TAA) program until 2013.  Authorization of the TAA program expired in February, and renewal of its benefits for workers negatively impacted by trade has been a sticking point for the administration, which has insisted on TAA authorization being linked with passage of the trade deals.  

Inclusion of the TAA extension has been contentious.  Senate Finance ranking member Orrin Hatch (R, UT) expressed concern about including TAA in the planned markup, and Senate Minority Leader McConnell has long said TAA should be considered on its own merits.  Republicans in both the House and Senate have expressed concern about the effectiveness of the program and cost given the budget deficit.  And while officially Republican’s didn’t post at Thursday’s hearing over scheduling differences --Republicans reportedly wanted a morning not afternoon timeslot so there would be time for amendments -- inclusion of TAA certainly didn’t help.

The TAA dust-up is just one of the challenges congressional leaders face.  While there has long been a significant block of bi-partisan support for the trade deals this is one area where objections from both labor groups and tea-party groups could jeopardize passage.  Some House Democrats including Rep. Levin (D, MI) have announced opposition in particular to the Columbia Agreement, citing Columbia’s record on union violence and some tea-partiers object to the heavy hand of big government in the agreements as not truly “free trade”. 

Last a word on process - for those of you envisioning a “mock markup”.  Unfortunately, it’s not quite as entertaining as it sounds.  Senate Finance and the House Ways and Means committees typically hold informal markups on trade deals so that members can offer their ideas before the administration submits the deals to Congress. 

Inaction this week in the Senate will likely throw off the schedule in the House where the measures are even more controversial.  In the House there are just three short weeks before the August recess to complete its work –mock markup, real committee markups and passage on the floor.  Advocates of the agreements hoped for passage before the August recess, otherwise opponents of the agreements will have all of August to voice their concerns when their members are home.   

---------------------------------------------------------------------------------------------------------------------------------------

W2A UPDATE - APRIL 18, 2011

This edition of the W2A Update will focus on the political and policy fights surrounding the federal budget.  Now that a government shut-down has been diverted we’ll provide our take on the major battles to come – and they will be major -- and summarize some key outcomes for FY 2011.

Our Take: Tony & Jeff on the Debt Limit Vote/FY 12 Budget

Now that the “crisis” is over and the FY 2011 budget has been resolved, the real work in D.C. begins on two more difficult challenges – raising the national debt limit, and putting together budget and spending bills for FY 2012.  In this edition of Our Take (welcome to our first one), Jeff and Tony offer their views on these two politically-charged issues, as well as what might happen with both in the coming weeks and months.

TONY: As we predicted a month ago, the politicians in Washington, D.C. avoided a government shutdown, and while that battle was intense and lasted several months, it was a small matter compared to what comes next – a super political vote to increase the national debt limit, and a long slog towards drafting and then passing the FY 12 budget and spending bills.

What comes first is the vote to increase the national debt limit.  From a policy standpoint, it’s a no-brainer – the national debt limit must be raised or the federal government could default on its bonds.  Not good.  When it comes to increasing the national debt limit, there is one constant truth:  every politician in D.C. really really wants to vote against raising the national debt limit, and every one of them also knows that voting no is completely irresponsible. 

So to make things easier on their Members, the Republicans are pushing a so-called grand bargain:  they will support an increase in the debt limit if the Democrats also agree to a huge package of spending cuts.  Unfortunately, I believe the R’s are putting the cart before the horse.  I know it’s not fun, and I know that my R friends in D.C. really want to vote against the debt limit increase, but they just need to bite the bullet, and get this one behind the.  In doing so, they can rightfully focus on the next big policy debate in front of them, which is putting together a FY 2012 budget with significant spending reductions and reforms to entitlement programs.

The FY 12 budget battle is the real fight that both parties have been itching to have for the past year. There are a number of different deficit reduction proposals at play right now:  the President has a plan, the bi-partisan deficit reduction commission has a plan, the House Republicans have a plan, and there is a small bi-partisan group in the Senate, the “group of six”, that is also working on a plan. In the coming weeks and months, I’m guessing there will be several more plans that are introduced by various factions inside Congress.

All of the plans currently on the table contain a lot of spinach – major cuts in federal spending, entitlement reform, and tax reform – as well as a lot of political fodder for both sides.  And, don’t fall into the trap of just thinking that these fights will be R vs. D.  Many of these fights will also pit R vs. R and D vs. D simply because the political stakes get really high when you’re talking about cutting spending, raising taxes, changing Social Security and Medicare, and essentially overhauling government as we know it.

From where I sit, the Republicans should be pleased by where things are right now.  They have set the table well for a prolonged debate this year (and next) on spending cuts and entitlement reform, and President Obama has now taken on the issue, and pitted the two parties against each other. The challenge for the House Republicans will be to resist the temptation to over-reach on the debt limit issue, and turn that one vote into something bigger than it should be at this moment.

To me, the best political outcome for the R’s is to vote in large numbers for the debt limit increase AND set the table for serious government and budget reforms in the upcoming negotiations over the FY 12 budget.  Speaker Boehner has his hands full on this one, and I’m sure it will get ugly over the next several weeks as the politicians crow in front of the cameras, and deal with the reality that there are times in public life where you just have to act like an adult and vote like one too.  For now, my prediction is that the rhetoric will be hot, the media will make it look like a circus, and that the strong majorities in both the House and Senate will ultimately vote to raise the national debt limit.

And, then they will turn to the really big stuff – the FY 12 budget and spending bills which will take months to complete.

JEFF: Greetings all from inside the beltway!  I agree with much of what has been outlined by Tony, but the $14.3 trillion dollar question (the current amount of our debt) is how many of the newly elected members of Congress can put aside the campaign posturing and take difficult governing votes.  It is one thing to run for office and promise change or to cut spending.  It is an entirely different reality to take brutally difficult policy votes to solve problems and move our great country forward.  I believe Speaker John Boehner has the toughest job in D.C. right now because he has to balance the Tea Party leanings of his new freshman class with the need to compromise and solve our country’s problems.  It may be my inside the beltway view, but I have a small disagreement with Tony that every politician in D.C. knows it would be irresponsible to default on our debt. 

A recent Wall Street Journal/NBC poll underscores Tony’s point that “every politician really REALLY wants to vote against raising the national debt limit.”  The poll asked Americans if the national debt limit should be raised to ensure the full faith and credit of the United States Government, only 32 percent of respondents said yes, and a whopping 62 percent said no, do not raise the debt ceiling.  Given the amount of anger that Americans have about the economy, too much spending in Washington, D.C., and a high level of cynicism towards all politicians, the results are not surprising.  The policy reality is that the US government cannot default on its debt when it has the flexibility to raise the debt ceiling and maintain United States Treasury bills as the gold standard in the global economy.  So, our elected leaders will have to go against the polls and vote to raise the debt ceiling.  It will take both Republican and Democratic votes to pass legislation that will raise the federal debt ceiling and the 2012 spending bills to operate our federal government. 

The good news in all of this big budget drama is that it the issue of deficit reduction and our national debt is front and center and federal spending will be cut dramatically.  There are very real philosophical disagreements on how to cut trillions from our federal budget over the next 10 years and that story will unfold over the next 18 months and all the way to the 2012 presidential elections.

LEGISLATIVE UPDATE

FY 2011 Budget Deal

Last week began with House and Senate leaders and the President successfully forging a deal to cut nearly $40 billion in federal spending for the remainder of 2011.  The continuing resolution (CR) deal helped to prevent a government shutdown. 

The deal promised to close out the fiscal year 2011 budget process more than six months already into the fiscal year.  Negotiations had limped along through eight temporary budget measures.  The last few weeks witnessed an increasingly tense negotiation among President Obama, House Republican Speaker John Boehner, and Senate Democratic Majority Leader Harry Reid, culminating in an 11th-hour compromise with barely time to spare before a government shutdown.

The days before the vote were filled with strong criticism of the deal from both liberals and conservatives that caused many members of both parties to reconsider how they would vote.  National labor leaders sharply criticized the Administration and congressional Democrats for agreeing to the steep spending cuts.  Conservative commentators criticized Congressional Republicans for not cutting spending more deeply, and compromising on policy provisions.  President Obama delivered a speech that was highly critical of congressional Republicans and Congress in general.  And the Congressional Budget Office published a report suggesting the deal wouldn’t cut current spending as deeply as claimed, though the long-term savings were significant.  Yet congressional leadership from both parties and the White House prevailed and the bill passed.

The Senate passed the bill 81-19. Senators Murray, Cantwell, and Merkley (D, OR) voted yes; Senator Wyden (D, OR) and Idaho Senators Crapo and Risch voted no.  Overall, four Democratic Senators and 15 Republican Senators voted no. 

The House passed the bill 260-167.  All WA members voted yes except for Rep. McDermott who voted no; Rep. Reichert was absent due to a death in the family but announced he would have voted “yes.”  Voting for the bill were 179 Republicans and 81 Democrats; voting no were 59 Republicans and 108 Democrats.  There was much speculation about how many freshmen Republicans, as a group more conservative than most of the Republican caucus, would support the deal.  In the end 59 of the freshman vote for the deal and 28 voted against.  And while Minority Leader Nancy Pelosi voted against the bill, the #2 ranking Democrat Steny Hoyer voted for the bill.

One of the last stumbling blocks to the deal was policy provisions on social and environmental issues and ending funding for the President’s health care bill that were strongly supported by most Republicans and as strongly opposed by many Democrats and the White House.  The compromise was to pull the provisions from the bill, and subject them to separate votes.  Both the Senate and House would have to pass the provisions for them to be added to the final bill.  The House adopted the resolutions, while the Senate rejected them, so the provisions did not become part of the final legislation.

The final bill provides a spending level nearly $38 billion below what last year’s Congress was considering and $78.5 billion less than President  Obama’s initial 2011 budget request.

Non-defense spending was hardest hit, with a reduction close to $42 billion, while defense spending was increased.  State and local governments will feel the pinch most as billions of dollars will no longer flow from Washington for transportation, water and sewer, community development, and homeland security-related projects.

The budget deal also prevents the President from appointing four “czars” to oversee policy.  In the past President Obama has avoided the Senate confirmation process by creating czars to oversee health care policy, climate change, urban affairs, and the auto industry. The four positions are currently vacant or have already been eliminated; however the President submitted a statement when signing the bill into law claiming executive privilege to appoint czars in the future if he so decides.

FY 2012

Attention will shift to the 2012 budget when Congress returns on May 2nd from its Easter recess. Treasury will soon exhaust its borrowing authority, requiring Congress to raise the federal debt ceiling or risk default.  Republicans will insist on - and Democrats will oppose - steep spending reductions.  Cobbling together a deal that can pass the Senate and House could prove even more difficult for congressional leadership and the White House, and we easily could see a repeat of the lengthy 2011 battles.  

The first action on the 2012 budget occurred Friday when the House voted 235-193 to accept the Republican budget resolution prepared largely by Rep. Paul Ryan. The plan aims to “….tackle deficits produced by the growing health and pension costs of an aging population, while limiting spending as a share of the economy…” (The Economist, Feb. 11, 2010).  It also proposes to broadly simplify the tax code by reducing the number of income tax brackets down to two brackets, replaces corporate income taxes with a corporate consumption tax of 8.5%, and eliminates the AMT and taxes on interest such as the capital-gains tax, estate tax, etc.  For details about the plan see:   http://www.roadmap.republicans.budget.house.gov/Issues/Issue/?IssueID=8514

House Democrats released an alternative budget resolution that was rejected by a vote of 259-166.

The President has responded with his own deficit reduction ideas.  The plan proposes “across the board” spending cuts and about $1 trillion in tax increases.  According to the Wall Street Journal the tax increases would come from “….a major rewrite of the tax code to eliminate many tax breaks, a move that White House officials hope can account for $1 trillion of the $4 trillion in deficit reduction.” (WSJ, Apr. 13, 2011).  Republican leaders were quick to declare they would not support tax increases. 

Transportation

Congressional committees continue to hear testimony and collect information as they draft the next surface transportation bill.  The House Transportation Committee prefers a six-year bill, but a prominent Senator has suggested a three-year bill might be all that Congress can fund, given declining transportation-related revenue and budget pressures.  It is anticipated that the next bill could provide less annual funding than SAFETEA-LU, the current bill, and provide little or no funding for project earmarks.

The final 2011 budget reduces transportation funding compared to 2010.  Total Federal Highway funding drops 2.2% from last fiscal year to this fiscal year, representing Congress' previous decision not to renew general funds transfer to compensate for declining transportation-related tax revenues.  The bill also wiped out all proposed 2011 funding for high-speed rail, canceled $400 million of 2010’s un-contracted high-speed rail funds, reduced Amtrak capital funding by $130 million, cut transit capital funding $400 million, and canceled $280 million in prior transit appropriations.  The bill also rescinds $2.5 billion in highway contract authority plus $630 million in very old unused highway earmarks.

Locally, about $31 million in high speed rail funding is at risk.  The funds were for renovating King Street Station, a new station in Tukwila, and to upgrade track near Mount Vernon.

Somewhat surprisingly, two major USDOT grant programs survived in the final deal.  The TIGER (Transportation Investment Generating Economic Recovery) program is funded at $527 million for FY 2011, a reduction of $73 million compared to FY 2010. USDOT is expected to announce applications details within a month or so. This is great news for transportation stakeholders who are struggling with how to deliver big, expensive projects which once completed will move people and freight faster, quicker, and cleaner in the face of reduced transportation funding. Five WA agencies have received a total of $110,000,000 from the total available $2.1 billion available through the previous two rounds of TIGER grants.

The TIGGER (Transit Investments for Greenhouse Gas and Energy Reduction) is preserved at $50 million for 2011, a reduction of $25 million compared to FY 2010. Five transit providers received $13,242,244 of the $175 million available through the previous two rounds to TIGGER grants.

The 2012 budget could be even worse.  The House Budget resolution, approved Friday, proposes to reduce federal transportation funding by 28% from current baseline levels and includes eliminating all federal funding for high-speed rail.  Senate Finance Committee Chairman Max Baucus this week said without new revenue, federal highway funding will drop from the current $43 billion baseline level to about $28 billion annually.  An alternative budget resolution sponsored by Democratic Representatives included more funding to transportation but was defeated.

Meanwhile, transportation-related revenue may decline further as rising gas prices cause people to drive less and purchase less gas.

Water Resources

Top brass from the Army Corps of Engineers spent a lot of time in front of House and Senate Committees over the last several weeks.  In March, the House Energy & Water Development Appropriations Subcommittee and the House T&I Subcommittee on Water Resources and Environment held hearings on the Corps’ budget.  House members focused on several concerns including the Corps’ use of the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund, “404” permit problems, and regulatory oversight. 

In the Senate, the focus was more on the importance of continuing the work of key infrastructure programs, especially programs that create jobs and, “…the infrastructure that is constructed continues to benefit the economy for decade…which in turn creates more jobs.” (Opening statement of Chairwoman Dianne Feinstein (D, CA) before the Energy & Water Subcommittee, Apr. 13, 2011) 

The most positive news to-date for water resources interests may be efforts by Senator Inhofe (R, OK), the ranking member of the Senate EPW Committee, to move infrastructure projects through that body.  In his opening statement of the EPW subcommittee on Transportation and Infrastructure hearing on the Corps’ budget, Inhofe strongly stated his support of efforts by Senator Boxer (D, CA) to move a Water Resources Development Act (WRDA) bill through the Senate.  The EPW committee may have hearings on a new WRDA bill in May. 

It has been reported that Inhofe has also been working with Senator McCain (R, AZ) to reach a deal on “earmarks” that would allow the Senate to consider specific earmarks requests if they are first considered and approved by the Senate authorizing committees.    

Other Senators are more focused on Corps reform.  Senators DeMint (R, SC) and Lindsey Graham (R, SC) introduced S. 573, the Corps of Engineers Reform Act of 2011, on March 14.  The bill converts the Harbor Maintenance Fund into a state-administered block grant program.  It also establishes the Water Resources Commission. 

Financial Services

The CR deal provided some wins for both Democrats and Republicans.  Democrats largely got the funding levels they wanted for financial service regulators (SEC gets an 8% increase and the CFTC gets a 20% increase).  Republicans were able to win concessions in the way of some increased oversight over the newly created Consumer Financial Protection Bureau. 

Republicans have not given up on efforts to further limit Dodd-Frank, however.  In the latest move to roll back Dodd-Frank, Senator DeMint (R, SC) introduced

S. 712, the Financial Takeover Repeal Act of 2011.  The bill has 26 co-sponsors, including Minority Leader Mitch McConnell (R, KY).  It is very unlikely the bill will move much in the Democrat-controlled Senate.  In the House the House Financial Services Committee and House leadership have aggressively moved legislation to reduce the government’s role and exposure in the housing lending market.

FAA Reauthorization

The House joined the Senate in quick action on the FAA reauthorization bill this Congress by passing a four year reauthorization on April 1st.  The two bills however, are significantly different, whether the length of the authorization – the Senate two years to the House’s four – or significant policy differences such as the House’s provision repealing the National Mediation Board recent rule on counting unionization votes for rail and airline workers.  Other policy differences include whether or not to continue the Essential Air Service program which provides subsidies to airlines to continue serving rural areas, the number of flights into Reagan National Airport, and how to pay for modernization of air traffic control systems.  Repeating a common theme this year, the House bill funds the FAA at fiscal year 2008 levels setting up yet another conversation on spending levels with the Senate. The Senate has named its conferees which include Senator Cantwell, the newly appointed chairwoman of the Senate Aviation Operations, Safety and Security subcommittee.  The House and Senate also passed a short-term extension of the current authorization, allowing the FAA to continue operations.  It is the seventeenth extension since the current authorization expired in 2007.

National Flood Insurance Program – FEMA Maps 

The Federal Emergency Management Agency (FEMA)’s Administrator Craig Fugate announced the agency would replace its “without levee” approach to determining flood insurance rate maps.  The change came in response to bi-partisan (Gasp! It really does exist) pressure from both the House and Senate objecting to FEMA’s practice of assuming uncertified or damaged levees, or damaged dams simply didn’t exist when determining flood risk level.  Both the House and Senate told Fugate in a letter that the policy didn’t reflect the level of flood protection that was actually in place and would devalue home values and dampen the economic viability of the communities affected.  While FEMA has said that it will replace its “without levee” approach with more precise measures of flood risk, it has yet to outline what that process will be. 

In addition to the Administrator’s letter, the House Financial Services committee is holding a series on reforms to the National Flood Insurance Program the current authorizing language expires September 30th this year.  Like several programs we’ve discussed above, NFIP faces fiscal challenges – the program has never been able to bring in enough premium receipts to pay for the claims it incurs.  In addition to the authorization, several members have introduced bills – one which would eliminate the program entirely leaving the provision of flood insurance to the private sector; and a bill by Rep. Denny Rehberg (R –Mont.) would require the Army Corps to review and certify levees in rural areas when requested.    

 

============================================================================================

W2A UPDATE - FEBRUARY 2011

2011 has started with a bang and promises to be, if nothing else, a very exciting and interesting year.  The 2012 elections looming just ahead ensure that high-stakes politics will influence everything in the public arena in the coming months.  A clear indicator is the intensity of budget battles that are well underway across the country from state capitols to Washington, DC.  Each day brings news of the latest twists and turns on the legislative, budget, and political fronts. 

Hang on, friends, it’s going to be wild ride in the world of government affairs this year and we’ll do our best to help you sift through the high-pitched drama. 

Here at Washington2 Advocates (W2A), the beginning of 2011 has been marked by excitement and change.  We added a major new player to our bench on February 1, with the addition of Jeff Bjornstad as W2A’s new President of Federal Affairs and Strategic Communications (http://www.washington2advocates.com/news.htm).  If you haven’t had a chance to connect with Jeff yet we welcome you to do so.  As he likes to tell us, “He’s ready to serve!”

Jeff can be reached at: 202-234-0950 ext. 238 or jeff@washington2advocates.com

Another major change for us will be the departure of Liz Fortunato.  Tony and Nina recruited Liz to W2A when she was getting ready to leave Rep. Doc Hastings’ DC office over nine years ago.  She’s been a big part of who we are here at W2A, providing strong substance and strategic legislative insight.  Thank you, Liz, for your years of service and loyalty to W2A and its clients.  We wish you and your family the best as you embark on the next chapter in your life.  

Finally, congratulations to the WA state congressional delegation and our friends at the Boeing Company for the big victory on the tanker deal.  It’s a major win for Washington state and Boeing.  Bravo! 

LEGISLATIVE UPDATE

Congress returns to work this week.  Most immediate on the agenda is the FY 2011 budget and striking a deal by March 4 to prevent a government shutdown.  Can they do it?  How much should we really care?  Bottom line, it’s going to be a very long budget season. 

Federal Budget

The current, temporary FY 2011 funding bill ("continuing resolution") expires at midnight this Friday (March 4).  To allow more time for negotiations and to avoid a shutdown, the House has prepared a two-week temporary funding bill that reduces spending by $4 billion (a two-week prorated share of the $61 billion cut desired by the House for 2011).  For details of the cuts proposed in the House CR see http://appropriations.house.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=266

Some leading Senate Democrats have expressed tentative support for the plan, which would avert a government shutdown.  The situation is very fluid however, and there’s still a chance negotiations will break down, resulting in a temporary government shutdown. 

The more difficult negation will be over the final 2011 bill.  The “easy” cuts will have been made in the two-week spending bill.  The bill represents the House Republicans first chance to take a shot at changing major legislation that passed in the last few years - it rescinds money from certain unobligated ARRA (the stimulus bill) accounts, saving $5 billion -- much of it from the Department of Transportation’s high-speed rail bill.   Additionally, the bill prohibits the use of any funds for implementing the Affordable Care Act – the health reform bill. 

Senate Democrats oppose such steep cuts, and will propose a bill that reduces spending more moderately.  The differences are significant, both sides are dug in, and many Members are predicting negotiations will break down.  That would result in federal agencies and programs shutting down until a final spending bill is approved.

The President’s proposed 2012 budget of $3.7 trillion is down only slightly from the $3.8 trillion he proposed a year ago.  It would result in a budget deficit of $1.1 trillion, again down only slightly from this year’s projected deficit of $1.65 trillion.  Security-related spending (Defense, State, and Homeland Security) and entitlements spending (Medicare, Medicaid, and Social Security) which comprise the bulk of the federal budget would remain largely untouched while other spending would be frozen for five years.  The proposal continues the tax cuts for the middle class and ends the tax cuts for wealthier Americans beginning in 2014.

Republicans, and some number of Democrats, oppose all or much of the above strategies, and the congressionally-produced budget is likely to look very different.

A link to the President’s budget can be found here: www.whitehouse.gov/omb/budget.  If you are interested in greater detail look at the appendices which includes more specific information by agency.  And for those of you budget geeks (like a few of us in the W2A office) that really want detail you can typically find budget justification documents by going to the specific agency’s website and finding the budget documents.  

Earmarks:  If you haven’t already heard, earmarks or congressionally-directed projects are off the table for FY 2012.  Senator Inouye, Chairman of the Senate Appropriations committee reluctantly joined the growing chorus of anti-earmark sentiment.  He announced the Senate would not accept earmark requests from Senate (joining both the House and President Obama) but noted that the process would be reviewed and reconsidered in the future.  In the meantime several Member offices have indicated they will develop lists of the federal funding needs in their districts and states.  You can be certain that Members will still look for ways to help important projects at home.

Transportation

The current extension of SAFETEA-LU expires at midnight this Friday (March 4).  Congress is expected to pass a bill this week to extend SAFETEA-LU through September 30th, 2011.  The bill would continue current funding levels, and includes no policy changes.

Congressional transportation committee leaders continue to gather input and draft a multi-year authorization bill.  Meanwhile, the President released a broad and general proposal for a six-year $551 billion plan to replace SAFETEA-LU.  The proposal does not include a funding mechanism, and it is unclear if and when more details might be released.   The President’s plan is focused on “fix-it-first” instead of adding capacity. The plan would consolidate over 55 highway programs into five programs and merge five transit programs into two programs to expedite project planning and delivery. 

The House’s proposed 2011 spending bill contains a number of cuts to transportation programs.  Most of the spending reductions come from eliminating 2010 funding for passenger rail, TIGER, and transit New Starts programs that have not been contractually obligated, and eliminating proposed 2011 funding for those programs.  Proposed 2011 transportation earmarks were also eliminated, including approximately $221 million designated for 57 projects in WA State.  For the list of WA state projects see:  http://wsdotfederalfunding.blogspot.com/2010/12/senate-publishes-omnibus-with-transpo.html

FAA Bill

Work on the Federal Aviation Administration (FAA) reauthorization bill is well underway in both the House and Senate.  The two controversial issues that held the bill up last Congress - the number of flights out of Reagan National Airport and union issues - have both resurfaced.

Emphasizing the 13 million jobs tied to the aviation industry, the two year FAA reauthorization bill was put on the fast-track for Senate floor consideration, as it was the first substantial piece of legislation taken up by the Senate this year.  Senator Rockefeller (D, WV) reintroduced the exact bill that passed the Senate last year allowing the bill to bypass the committee process.  After several weeks of debate and agreeing to add at least 12 more roundtrip flights out of Ronald Reagan National airport, the bill passed 87 to 8.

Meanwhile the House Transportation and Infrastructure committee moved its version of a four year reauthorization bill (HR 658) on February 16, authorizing $59.7 billion for FAA programs.  The bill includes a controversial provision that was defeated in the Senate last year that overturns a National Mediation Board rule that allows outcomes on union elections to be determined by a majority of votes. 

The two sides have until March 31, 2011 to reach agreement when the current FAA extension will expire.  It is the seventeenth stop-gap extension since the last FAA reauthorization bill expired in 2007.  There are a number of significant differences between the House and Senate bills, making completion of both House floor consideration and conference unlikely before the current extension expires. 

Water Resources

Senate Energy and Public Works Committee Chair Barbara Boxer and Ranking Minority Member Jim Inhofe are asking Senators to submit a list of priority projects for possible inclusion in a Water Resources Development Act (WRDA) bill.  This is good but very surprising news; conventional wisdom was that the earmark ban enacted by the Senate would probably preclude project funding in bills like WRDA (and that could still end up being the case).  Senator’s Murray and Cantwell have aligned the request process for Washington state projects and are asking for WRDA requests to be submitted by March 11. 

The news is somewhat mixed when reviewing the Administration’s 2012 budget proposal.  The Army Corps of Engineers is proposed to receive nearly $800 million less than it received in 2010, and $200 million less than the President proposed for 2011.  Perhaps the worst news is that the Construction program funding drops to $1.48 billion, from the $2 billion provided in FY2010.  Funding for Investigations overall is reduced by $57 million but not all types of investigations are slated for reductions. 

On the brighter side, Operations & Maintenance funding is mostly unchanged from FY2010, with proposed funding of $2.3 billion.  The budget also prioritizes funding for dam safety and a levee safety initiative ($40 million increase to $50 million). 

Energy and Environment

The revolutions in North Africa and the Middle East have brought our reliance on energy imports back into the spotlight.  Domestic gas prices, up 54 cents from Feb 2010, have marked the highest recorded price in over a decade.  Due to this volatility, talks have resumed about the need for an increased use of domestic energy sources such as natural gas and for a comprehensive domestic energy policy.

Amid these energy talks, the Energy Information Administration (EIA) recently doubled its estimates of recoverable shale gas, the equivalent of a 150-year supply.  Greenhouse gas emissions from the combustion of this type of recoverable natural gas are generally 44 percent lower than coal.  Companies who run industrial boilers, heaters, and incinerators would be required to control pollution, but at a 50 percent cost savings due to an overhaul of air pollution regulations issued by the Environmental Protection Agency (EPA) for the Clean Air Act standards.

As expected, EPA is a major target in the 112th Congress.  Some Democrats are pushing for delays of the new carbon emissions rules and House and Senate Republicans are attempting to strip the EPA’s ability to regulate green house gases.  Similarly, the spending bill passed by the House mid-February cuts billions of dollars from the EPA’s budget, which would block the funding necessary for implementing greenhouse gas regulations for the rest of FY 2011. 

Financial Services

While the legislative battle on financial services reform may have appeared to end last year with final passage of the financial service reform legislation (PL 111-203, a.k.a. Dodd-Frank), the battle has simply shifted to the regulatory front.  The shift actually began before the ink was dry on the President’s signature of the “landmark” legislation. 

The tug-of-war over financial service reform and implementation of Dodd-Frank picked up immediately and on multiple fronts at the beginning of the 112th Congress. 

Derivatives were back in the spotlight in January with WA State’s two Senators playing key roles in a call to the Commodity Futures Trade Commission (CFTC) to, “quickly and aggressively implement the position limits on speculation in the oil and commodity markets.”  The letter to the CFTC was an effort lead by Senators Maria Cantwell and Ben Nelson (D, Fl).  Senators Murray, Levin (D, MI), Menendez (D, NJ), Sanders (I, VT), Whitehouse (D, RI), and Wyden (D, OR) were co-signers of the letter that also asked the CFTC to, “…reject calls to delay new rules.”  For a copy of the letter please contact us.

The Financial Crisis Inquiry Commission (FCIC), a panel created to investigate the causes of the financial collapse, released its 567-page report at the end of January.  Among the report's key findings were that the collapse was, “a failure of government regulation and supervision; corporate governance; government preparation to deal with such a crisis; excess risk by banking institutions; and loss of accountability and ethics by lenders.” (Josh Hart for National Journal 2/16/2011)

The Commission was split along party lines, with Republican members producing a pre-emptive dissenting report that places greater blame on government housing policies as a cause of the financial crisis (National Journal 1/26/2011).  The partisan divide over the report is further evidence of the wide gulf between Republicans and Democrats over matters related to how to regulate the financial sector and, especially matters related to the future of Fannie Mae and Freddie Mac.  (See www.fcic.gov for more information).

At the end of 2010, Senate leaders were unable to reach agreement to bring to the floor a vote on President Obama’s nominees to two key financial regulatory posts (Peter Diamond to the Federal Reserve Board and Joseph Smith to head the Federal Housing Finance Agency).  The nomination process starts all over in the current Congress and the lack of action simply adds complexity to the challenges related to the future of Fannie Mae, Freddie Mac, and the host of issues related to implementation of Dodd-Frank.

On February 11, President Obama finally released an “outline” on the future of Fannie Mae and Freddie Mac.  As reported by the Huffington Post the outline basically lays out three options to slowly wind down both entities and reduce the federal government’s footprint in the mortgage market.  But, the plan falls short of endorsing any specific proposals and lacks much in the way of details on how to accomplish this.  Congressional reaction was fairly mixed with some Republicans expressing pleasant surprise that the President would like to wind down the agencies and some Democrats stressing the need to continue some government role to ensure housing affordability. 

“The report's takeaway message is that the U.S. housing finance system is likely to undergo major changes going forward, and with the likely outcome being a significantly smaller role for the U.S. government," analysts at research firm CreditSights said in a note.  (http://www.huffingtonpost.com/2011/02/11/obama-fannie-mae-freddie-mac_n_821824.html)

Like most issues in Washington, DC, the main stage right now for the battle over financial services reform is playing out in the federal budget.  In general, Democrats are pushing for more funding for regulatory agencies charged with policing Wall Street and quicker regulatory action while Republicans continue to resist such moves, calling for restraint and caution.  

Under President Obama’s FY 2012 budget proposal the Securities and Exchange Commission (SEC) would receive a 27 percent increase and the CFTC would receive an 82 percent increase over current funding levels.  As reported in CQ Today Administration representatives explain that the, “The increased funding for both agencies would be used to strengthen existing enforcement of laws and beef up staffing levels to allow the commissions to fulfill their new duties….” (CQ Today, 2/14/2011).  The President’s budget also proposes a new user fee, estimated to raise $117 million in coming years to fund the CFTCs’ “non-enforcement activities”

Republicans intent on reducing government spending, however, have much smaller budgets in mind for these agencies.  House appropriators proposed a 34 percent reduction to the CFTC’s budget for the remainder of FY 2011 and a $60.9 million reduction for the SEC.  The House voted down a floor amendment offered by Rep. Barney Frank (D, MA) to restore most of the SEC’s current funding by a vote of 160-270.  House Republicans have proposed $80 million for the rest of the fiscal year for the Consumer Financial Protection Bureau (CFPB) compared to the $134 million proposed by the President for FY 2012.

CARD Act one year anniversary – The CFPB reported last week that one year after the passage of the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act), consumer are realizing benefits of the act.  Generally, there have been fewer credit card interest rates hikes and late fees are lower.  The initial report, however, does not include the full range of costs such as annual fees, which are likely to be higher.  Elizabeth Warren, Obama’s consumer watch dog charged with setting up the CFPB, stated in the Wall Street Journal on February 23rd that "substantial challenges remain." 

TONY’S TAKE:  Will there be a government shutdown?

As we reported earlier in this newsletter, the first big legislative battle of 2011 is centered on Congress and the White House reaching agreement, ahem, on the FY 2011 budget they should have finished last year.  Alas, this year is last year for now, and then we’ll get to this year at some point in mid-spring.

While the budget crunchers focus on the size of the cuts and where they will be made, the No. 1 question the politicos want answered is whether there will be a government shutdown in March.  I am going to boldly step out on a limb here, and answer the question:  No.  There will not be a government shutdown.

Why?  Because House Speaker John Boehner will not allow it to happen, and the public’s concern over the rising federal deficit means it will be tougher for President Obama to pummel the GOP in the same way that President Clinton did in late 1995 and early 1996.

Let’s start with Speaker Boehner:  he’s a political pragmatist who also has a long memory.  He was a junior member of the House Republican leadership the last time there was a shutdown of the federal government, and he remembers how the government shutdown ultimately was a distraction that bore no political fruit for the Republicans.  At the same time, the shutdown follies helped Clinton restore his presidency, and catapulted him to a relatively easy re-election victory in 1996.  Boehner will undoubtedly be giving lots of history lessons over the next few weeks to a House GOP freshman class itching for a fight with President Obama over budget cuts.

The big challenge for Boehner will be finding the “sweet spot” on a budget deal that can pass the House, the Senate, and be signed into law by the President.  It’s definitely a tightrope for Boehner, but I think he will ultimately get the votes he needs to pass the FY 2011 budget, and put this issue behind him, so that he can focus on this year’s legislative agenda.

Boehner will also get some “help” from President Obama and the Senate Democrats on bringing the FY 2011 to closure.  Senate Majority Leader Reid and the President are also walking a bit of a political tightrope here – it will be tougher for them to dominate the debate like Clinton did because the federal deficit is now well above $1 trillion vs. the mere couple hundred billion dollars facing Congress in late 1995.  The “new normal” in politics is more accepting of significant budget cuts, and that will require the Democrats to be “pro cut/not too deep” vs. “little to no cuts at all.”

Lastly, even the most cynical elected official or political observer has to admit that the highly volatile situation in the Middle East requires more attention right now than engaging in a long, drawn out fight over a budget agreement that should have been finished three months ago.

So, will all this happen quickly and without drama?  Of course not – the process and the 24-hour news cycle require everyone to engage in some brinkmanship over the next few weeks before coming to agreement at the final hour.  But, my money is on both sides reaching agreement without a government shutdown, and doing it relatively soon.

One quick note in closing – we will be looking at ways in the coming weeks to include commentary from Jeff Bjornstad in these updates.  Jeff and I have already done some public speaking together, and hope to do more in the coming weeks and months.  We enjoy the chance to share our perspectives on political events, and we’re sure you’ll be surprised to know that we take great pleasure in the whole “point/counterpoint” component of such discussions!

W2A UPDATE - DECEMBER 22, 2010

As you may recall, our last W2A Update covered the very beginning of the lame duck session.  Congress had just returned after the elections and the news then included a great deal of political posturing and speeches about what the electorate had decided only a couple of weeks earlier.

Since it is, Washington, D.C., the posturing hasn’t diminished, but certainly more legislative activity has occurred.  What may be more significant, however, are the activities that occurred outside of legislation that we believe serve to highlight the tone for 2011. 

First, the House released the calendar for the 112th Congress.  A calendar doesn’t seem like such an interesting story, but what’s behind the creation of it is.  Republicans have pledged to make the overall process in the House more transparent, including time to review bills, scheduling hearings in the mornings and votes in the afternoon to avoid interruptions of committee work, and generally trying to make it easier for Members to return to their districts on the weekends.  This Dear Colleague outlines this approach in more detail.  

To complicate things, however, the Senate released its calendar and to many observers, it’s clear that Senate and House leadership did not communicate about the schedule in 2011.  There are 12 weeks during the next year when one chamber is in session and the other is not.  It’s hard to believe that something as simple as a calendar will set the tone for 2011, but it does.

Also in early December the so-called Deficit Reduction Commission released its report regarding recommendations and modifications to federal government programs and spending habits.  The response to the report varied, but regardless of whether its contents were embraced or shunned, this too will contribute to the tone in Washington, D.C. for the 112th Congress.  One particular sentence in the report jumped out at us and certainly speaks to its contents:  “Our challenge is clear and inescapable: America cannot be great if we go broke.”

The final item that we believe will contribute to legislative activities in 2011 is the very orchestrated and tactical decision by the White House to engage the GOP on tax cuts.  The President took quite a beating from his base for having done this, but with nearly every significant poll in the nation suggesting that Americans supported the effort, it appears the White House’s calculation paid off.  This episode signifies President Obama willingness to work more with Republicans and his political shift to the middle as he ramps up for the 2012 elections.  One can only hope this leads to a much more open dialogue between the Executive Branch and Congress.

D.C. LEGISLATIVE UPDATE

Congress finally completed its work in the lame duck session and adjourned today.  The House and Senate will reconvene on January 5, 2011.

While the lame duck session got off to a slow start, a number of significant items were completed in the waning days: repeal of “Don’t Ask, Don’t Tell”; passage of a food safety bill; ratification of the New START Treaty; completion of a historic tax bill; reauthorization of the Child Nutrition Act; funding for 9/11 first responders; and the finalization of a continuing resolution (CR) to fund the government until March 4th of 2011.   

In addition to legislative work, the House and Senate also completed leadership and committee selections for the 112th Congress.  For this legislative update we’ve highlighted for you the committee selections of significance in the Washington State Congressional Delegation, followed by a brief description on a few of the legislative issues of interest.

WASHINGTON STATE CONGRESSIONAL DELEGATION

In our last report we provided an update on Members in the Pacific Northwest to watch.  Since then, the House and Senate Democrat and Republican caucuses made Committee and leadership selections, and following is a highlight of some changes in Washington’s delegation:

Senator Patty Murray – Senator Murray will run the Democratic Senatorial Campaign Committee (DSCC) where she will lead the effort to try to retain the seat of 23 of her Democratic colleague in the 2012 election.  Because of Senator Murray’s success in what could have been an unsuccessful year, her colleagues believe her campaign model should be utilized by Members up for re-election in 2012.  What this really means is that Senator Murray and her staff just added a lot of work to their in-boxes!

Rep. Doc Hastings – As expected, Rep. Hastings was elected by his peers to be the Chairman of the House Resources Committee.  What is more interesting about his ascension to this position was his effort to try and move energy issues to the Resources Committee from the House Energy and Commerce Committee.  While his attempt to do so failed, Rep. Hastings has indicated a strong desire to have an active role in energy issues, so we expect to see more activity from him on that level.  

Rep. Norm Dicks – Also as expected, Rep. Norm Dicks was selected by his colleagues to be the Ranking Member on the House Appropriations Committee. In addition he will also continue to serve as ranking member on the Defense Appropriations subcommittee.  Rep. Dicks seniority in Washington, DC as it relates to Washington state goes without saying. 

Rep. Cathy McMorris Rodgers – What’s most important about Rep. McMorris Rodgers since our last W2A Update is that she’s a mom again!  Rep. McMorris Rodgers and her husband welcomed a new baby girl in December.  So in addition to juggling her parental responsibilities, she will also have her leadership post as Conference Vice Chair, and her new seat on the House Energy and Commerce Committee.  Another Member of Congress who will be active in energy issues in the 112th Congress. 

Rep. Adam Smith – Rep. Smith continues to ascend in the House Armed Services Committee, and just this week was selected as the Ranking Member and top Democrat on the committee.  It was a close battle between Rep. Smith and Rep. Loretta Sanchez (D-CA), but he prevailed by a vote of 97-86.

Rep.-elect Jamie Herrera – Rep.-elect Herrera will serve on the House Transportation and Infrastructure (T&I) Committee in the 112th Congress.  This is a great position for her as it reflects well upon the needs of the 3rd Congressional District.  With all the transportation and Army Corps of Engineers projects in Southwest Washington, the continued presence of this region on the committee is good news.

TAXES

On Friday, December 17th, President Obama signed into law the $858 billion tax package.  A coalition of moderate Democrats and Republicans in the House managed to pass the bill 277-148 following the Senate vote of 81-19.

In a nutshell, the bill prevented a tax hike for Americans at all income levels come New Year’s Day; guaranteed unemployed workers jobless benefits; created new incentives for businesses in 2011; and included a two percentage point reduction in the Social Security payroll tax.  This interactive chart from The Washington Post explains what the tax package means for individuals, and this one goes into more detail about what’s in the bill.  The White House also has an interactive map and chart to review as well.

As we mentioned previously, the biggest news about the tax package at times had less to do with its contents and more to do with the bipartisanship involved in its creation and eventual passage.

APPROPRIATIONS

As the lame duck pressed on it became clear that the final fate of FY11 spending bills will not be fully resolved until next year.  As reported previously, Congress passed a CR that would fund the government until December 18th and yet another until December 21st.  The House took a stab at its version of a spending bill that included all twelve appropriations bills and passed it by a small margin, 212-206 on December 8th.

Following suit, the Senate drafted its version that, unlike the House, included earmarks.  However, after a roller-coaster week, Senate Democrat leaders finally conceded that they do not have the votes to move the bill and withdrew it for consideration last week. 

In the end, Senate Majority Leader Harry Reid (D-NV) could only muster enough votes for a CR that will fund the government at FY10 levels to March 4th, 2010.  Working right up to the deadline, yesterday the Senate passed the bill 79-16, followed by a House vote of 193-165.  While maintaining FY10 funding levels, other highlights include additional funds for veteran’s programs and student loans, as well as continued funding for the Low Income Home Energy Assistance Program (LIHEAP), and extension of the authority for surface transportation programs, just to name a few.

OVERSIGHT

While oversight is of course not a bill, it will dominate legislative and committee activity in the 112th Congress.

As an example, it’s become quite clear that the Environmental Protection Agency (EPA) will be the target of significant Congressional oversight.  Rep. Mike Simpson (R-ID), the incoming Chairman of the House Interior Appropriations Committee, has indicated that he intends to use a great deal of the committee’s time on this very subject.  In addition to Rep. Simpson’s desire to conduct oversight, add to the list Rep. Hastings and the House Resources Committee, and jurisdictional interest by the House Agriculture Committee, the House Energy and Commerce Committee, and the House Oversight and Government Reform Committee.  Some have suggested that EPA Administrator Lisa Jackson will need to secure a permanent parking spot at the House of Representatives because she will be called to testify so often in the 112th Congress.

In addition to administrative oversight, House Republicans also intend to institute rules in the 112th Congress that would provide budgetary oversight.  For example, these will include a “cut as you go” versus a “pay as you go” rule that would only allow spending cuts to offset spending increases, and according to Congressional Quarterly the “…rules would require the Congressional Budget Office to project the deficit impact of legislation not just for the first 10 years of its life, but for four additional 10-year budget windows.  Legislation that increases the deficit by $5 billion or more in any of those four 10-year periods through mandatory spending increases would be subject to a point of order.”

Select an issue – health care, financial services, transportation, energy, trade policy, etc., and assume that some form of Congressional oversight will be conducted in the 112th Congress.

10th CONGRESSIONAL DISTRICT

The Census numbers are official and as we’ve speculated for awhile, Washington state will gain a 10th seat in Congress come 2012.  In the meantime, the redistricting commission – a volunteer panel of two Democrats and two Republicans – will begin the work of redrawing the Congressional and state legislative district maps.  Expect all of the district boundaries to change somewhat as the commission squeezes in a new district in the Puget Sound area.  Let the fun begin! 

TONY’S TAKE – Some Christmas Cheer and Musings

As we head into the holidays and the New Year, I thought I would close 2010 with a few end-of-the-year musings, and, of course, a little Christmas cheer for all of you who make this business possible for us.

Will gridlock rule D.C. in 2011?:  Yes and no.  There will definitely be gridlock on anything that appears too big, too expensive, and too much like over-reach.  But Congress will also find a way to work together on pocketbook issues because, let’s face it, the public doesn’t like either party, and they certainly didn’t give the Republicans a mandate in last month’s election.  My view is that nobody wins in 2012 if unemployment is still hovering above nine percent, and a cranky public that has bounced around in three elections in a row could make it four if the powers-that-be don’t grow up a bit, and work together to help improve the economy.

Washington’s congressional delegation will be a force in 2011-2012:  As committee assignments have shaken out for the next Congress, we can rejoice here in the Northwest at the group of power players representing us back in Washington, D.C.  Here’s a quick overview of the people who should be in position to help our region in the next two years:

• Senator Patty Murray:  She was a big shot before the election; she’s an even bigger big shot now.  She is in the Democratic leadership, she took one for the team and will be running the Democratic Senatorial Campaign Committee, and she’s a power player on the Senate Appropriations Committee.
• Senator Max Baucus:  As chairman of the Senate Finance Committee, he has influence on all kinds of huge issues including health care, taxes, and international trade.
• Senators Maria Cantwell, Ron Wyden and Mike Crapo:  All three are on big committees (Finance, Commerce, Energy, Banking, etc), and all three are growing in influence within the Senate.
• Congressman Doc Hastings:  As Chairman of the House Resources Committee, he will have influence over a broad array of key national and regional issues including, energy generation and reliability, renewable resources, management of our national parks and wilderness areas, and oceans policy. 
• Congresswoman Cathy McMorris-Rodgers:  She hit the jackpot this year after raising more than $1 million for the House Republicans campaign committee (Cathy and her Chief of Staff were a true political dynamic duo the past several months), and will have a post in the House leadership, a prominent position on the Energy and Commerce Committee (which pretty much has jurisdiction over everything), and she keeps her spot on the Education and Labor Committee.
• Congressman Dave Reichert:  He remains on Ways and Means, and is poised to rise in that important committee.
• Congressman Norm Dicks:  It really doesn’t matter who is in charge of the House, the man we all affectionately call “Norm” is always a big player, and he will be so in 2011-12 as the top Democrat on the House Appropriations Committee.
• Congressman Adam Smith:  As we reported earlier, he was announced as the top Democrat on the House Armed Services Committee.
• Congresswoman Jaime Herrera and Congressman Rick Larsen:  Our lone rookie in the delegation will join five-term veteran, Larsen, on the House Transportation and Infrastructure Committee.
• Congressman Mike Simpson:  The Idaho House member chairs the House Interior Appropriations Subcommittee and will work in tandem with Doc on a number of natural resources issues, including oversight over the Environmental Protection Agency.
• Congressman Greg Walden:  My friend, and first boss on Capitol Hill (I was his intern in the summer of 1985…yikes, that was a long time ago…when he was Chief of Staff to Rep. Denny Smith), is now one of Speaker Boehner’s top lieutenants, and remains in a powerful spot on the Energy and Commerce Committee.  Expect big things from Greg in the next Congress.

Will Governor Gregoire run for a third term?:  As the state legislature prepares for another ugly session, pundits are also focused on whether Governor Gregoire is going to retire in 2012 or run for another term.  By tradition, the Governor announces her/his plans for re-election following the conclusion of the third legislative session during their four-year term in office.  There is a lot of buzz in political circles right now that the Governor is considering running again, and, at a minimum, might hold off on making her decision on the future until the end of this year.  That steam you see coming from Congressman Jay Inslee’s ears is a result of this situation.

Who are the most likely candidates for Governor in 2012?:  I am guessing that after eight hard and long years in Olympia, the Governor will decide that she’s had enough, and that will open up the Democratic primary for a host of candidates.  The most prominent names mentioned are

Mr. Inslee, King County Executive Dow Constantine, Snohomish County Executive Aaron Reardon, and Senate Majority Leader Lisa Brown.  On the Republican side, the two prominent candidates talking to people right now are Attorney General Rob McKenna and Port of Seattle Commissioner Bill Bryant, and you can be sure that an arch-conservative will jump into the race at some point.

Patty will have her hands full keeping the D’s majority in the U.S. Senate: The 2012 map for Senate Democrats is not pretty as Patty will need to help 23 of her colleagues keep their seats.  Meanwhile, the Republicans just need to defend 10 seats.  The Democrats will be trying to re-elect Senators in these states:  Montana, Nebraska, Virginia, Florida, West Virginia, Ohio, Missouri and North Dakota; all are states that the R presidential candidate will likely win in 2012, or come very close to winning.  In addition, the D’s have to worry about a couple of retirements that could create tough races (Akaka in Hawaii and Bingaman in New Mexico).  The Republicans begin the cycle super worried about Massachusetts (Brown) and Nevada (Ensign…if he were to retire, that would actually make things easier for the R’s).  Expect the R’s to be on the offensive right off the bat in trying to force those vulnerable Democrats into tough votes in 2011 and 2012, and with President Obama facing difficult times in many of the states where the D’s have vulnerable Senators, you can be sure that will make it more difficult for Majority Leader Reid to find the 60 votes he needs to move bills through the Senate.

Bellevue and light rail: Yes, Sound Transit is our client, but having grown up outside Portland near where the first Max line was built, and then spending 17 years near the amazing Orange Line in Northern Virginia, you can put me down as pro-choo choo.  My hope is that the City of Bellevue doesn’t whiff on an historic opportunity to build a powerhouse urban core to our city, and that the City and Sound Transit come soon to an agreement that is progressive and positive for our community.

Coolest Ipod app for 2011:  I am an absolute Iphone app junkie (favorite app until last week was MLB 2010 which allows me to watch live baseball tv on my phone) and I got a new one last week that I just love.  It’s the new app from Xfinity (Comcast cable for those of you not in the know), and it allows you to control your cable box from your phone.  Why do I love this app so much?  Because I can change the channel from the phone, which really annoys my boys, and they can’t figure out why the channel keeps changing!  Loads of fun to come for sure in 2011 for dear old dad.

Auburn-Oregon: The Beaver in me just simply can’t fathom the thought of the damn Ducks playing in the national championship game.  I’m sure they will change uniforms after every quarter and that Phil Knight will watch the game from his personal blimp hovering over the stadium.  No, I’m not jealous – I’m realllly jealous.  Go Auburn.

And, finally, let me close out the year with a big thank you to all of you.  You make this business possible, and we really appreciate the opportunity to work with all of you.  We are blessed to have clients that like to work hard to make their organizations and communities better.  We enjoy diving deep with you on your challenges, and helping you to find positive solutions.  We really are blessed here at W2A, and we just want you to know how much we appreciate you.

Merry Christmas and Happy New Year!

END

=========================================================================================

W2A UPDATE - NOVEMBER 19, 2010

First a bit of housekeeping before we get into the meat of this W2A Update.  W2A has moved the Bellevue office – up one floor to suite 1640.  Our street address, P.O. Box and phone numbers remain the same.

Congress reported back to duty this week to begin its post-election business.  It was a whirl-wind week of news stories and political posturing but because it’s Washington, D.C., little was actually accomplished on key issues (e.g. FY 2011 spending bills, expiring tax cuts, etc.).  What did get accomplished this week were some key house-keeping matters - both chambers of Congress elected their leadership teams and the jockeying for committee assignments have begun.  We also saw hints of the themes and issues that may dominate in 2011. 

For anyone who even just glanced at the newspaper recently it is apparent that the election has flavored the approach to many issues in the lame duck session.  What happens during this lame-duck is most certainly a precursor for what is to come in the 112th Congress.  But the story of this lame duck session is not over…yet.  Congress is scheduled back after the Thanksgiving recess to resume its work for the year.

Following you’ll find updates on several items of interest, some of our initial thoughts for what it might all mean, and our recommendations (see Tony’s Take) for what we can do together to help you prepare and be successful in this ever-changing environment.

D.C. LEGISLATIVE UPDATE

Before delving into issues, we first want to cover how the election has impacted those we care most about in Washington, D.C. – the Members of Congress representing the Northwest.  Northwest members continue to steadily rise and will prove to be a powerful contingent in the next Congress.  Below is a quick synopsis of congressional leadership in general and our take on Northwest Members to watch in the 112th Congress.

THE SENATE

On Tuesday of this week, the Senate’s top leadership was selected both for the Democrats and Republicans.  In the 112th Congress, Majority Leader Harry Reid (D-NV) will assume his role as will Minority Leader Mitch McConnell (R-KY).  Our pick of Northwest members to watch include the following:

Senator Patty Murray (D-WA) – Senator Murray’s stock continues to rise, and as she heads into her fourth term, she continues to hold both an important leadership position (Senate Democratic Conference Secretary) and an extremely important position on the Senate Appropriations Committee.

Senator Mike Crapo (R-ID) – The Idaho delegation’s senior Senator has quietly but successfully maneuvered himself into a very important role in the upcoming Congress.  As a member of the Senate Finance Committee and President Obama’s deficit reduction committee, Senator Crapo has become known as the Senate’s “numbers man.”  We expect to see a lot more from Senator Crapo on government spending issues.

Senator Ron Wyden (D-OR) – Elected to his third term this year, Senator Wyden also sits on the powerful Senate Finance Committee and is a top Democrat on the Senate Energy and Natural Resources Committee.  He’s a leader on tax reform, and also as a member of the Senate Budget Committee, will be in the middle of all the big issues in the 112th Congress.

Senator Lisa Murkowski (R-AK) – As most of you have heard by now, Senator Murkowski successfully defended her seat in a historic write-in campaign.  Despite giving up her Republican leadership position after having lost the primary, Senator Murkowski has made it more than clear that she will caucus with the Republicans.  She will also likely retain her post as Ranking Member of the Senate Energy and Natural Resources Committee.  Given her hard fought election battle, and the fact that for some this was more of a victory over Sarah Palin and the tea party, we expect Senator Murkowski’s influence as a consensus builder and leader to grow. 

THE U.S. HOUSE OF REPRESENTATIVES

The House also held leadership elections this week, and while the roles have flipped, the top brass remains the same – Rep. John Boehner (R-OH) will assume the role as Speaker of the House and Rep. Nancy Pelosi (D-CA) will serve as Minority Leader.  On Thursday, House Republicans also voted to continue their ban on earmark requests.  At this time they also agreed to resolution necessary to establish the steering committee that will make decisions on House committee leadership.  Those decisions are expected after Thanksgiving.  Members to watch from the Northwest include:

Rep. Doc Hastings (R-WA) – The way we like to describe Rep. Hastings is either “workhorse, not a show horse” or “steady Eddie.”  Having served in the House since 1994, Rep. Hastings has been quietly but vigorously making his way up the ranks.  Rep. Hastings will more than likely be elected by his peers to be Chairman of the House Resources Committee, and proving he’s ready to lead, has been actively working within his caucus to move energy issues from the House Energy and Commerce Committee over to his jurisdiction.  Regardless of the outcome of this endeavor, the senior Republican in the Washington delegation is making his mark. 

Rep. Cathy McMorris Rodgers (R-WA) – Not to be outdone, Rep. McMorris Rodgers continues her upward climb.  She will run again for the fourth highest position in Republican leadership in the House, Conference Vice Chair.  She also gets to boast that a freshman House member, Rep.-elect Jaime Herrera, is a former staffer.  Rep. McMorris Rodgers is expecting her second child in December, and for all those working moms and families with special needs children out there, she continues to be an outstanding role model and advocate.

Rep. Norm Dicks (D-WA) – That Rep. Dicks is now a member of the minority doesn’t mean a thing.  As the top Democrat on the House Appropriations Committee, Rep. Dicks is a force to be reckoned with in Congress.  While his main passions include defense and interior-related matters, Rep. Dicks is a jack-of-all trades, maneuvers well through all kinds of issues, and will be a major player in the 112th Congress.

Rep. Dave Reichert (R-WA) – As a member of the powerful House Ways and Means Committee, Rep. Reichert will find himself in the middle of major tax and budget issues over the next two years.  Rep. Reichert could be in consideration for a subcommittee chairmanship on Ways and Means, so again, another member of the Northwest to keep an eye one.  

Rep. Greg Walden (R-OR) – Rep. Walden is the infielder of all infielders.  Selected by incoming Speaker of the House John Boehner to be his transition team leader, Rep. Walden will be putting all is major talents to work.  Rep. Walden is taking the structure of the House of Representatives, the voice of the voters, the will of his colleagues and marrying them together in hopes of mapping a successful governing plan.

Rep. Mike Simpson (R-ID) – Rep. Simpson will most likely be installed as the Chairman of the House Interior Appropriations Subcommittee, a position of extreme importance in the Northwest (as we all know well from Rep. Dicks’ previous work on this same subcommittee).  As the highest ranking Republican Member of the Northwest on the House Appropriations Committee (note: Rep. Denny Rehberg (R-MT) also serves on the committee), we expect to see a lot more activity from Rep. Simpson, particularly as it relates to funding issues for agencies within his subcommittee’s jurisdiction (the Environmental Protection Agency, for example).

BUDGET & APPROPRIATIONS

Congress did not pass a budget this year.  Repeat, Congress did not pass a budget this year.

In addition to an incomplete budget, not one of the spending bills for FY11 has been finished and it’s looking less likely that they will be done before the end of the year.  Before the elections Senate leadership both for Democrats and Republicans had been discussing the possibility of an omnibus appropriations measure to cover all 12 bills, but Minority Leader McConnell indicated on Thursday that he cannot ask his caucus to support a $1.108 trillion bill after voters made it clear earlier this month that they expect fiscal discipline.  With such close numbers in the Senate, losing the Minority Leader’s support will make it harder for Majority Leader Reid to secure the 60 votes necessary for cloture.  

On the House side, Democratic leadership has indicated that it will likely wait for the Senate to take the lead on the FY11 measures as the vote margin is so much slimmer.  This departs from the normal approach as spending measure normally originate in the House.  Reports suggest that some House Members believe an omnibus is still in the cards, but time will tell.  

The current Continuing Resolution (CR) expires on December 3rd and most recent speculation is that another CR will be taken up to keep the government running into the new year. 

A major focus of news for the week was action by Republicans in both the House and, surprisingly, in the Senate to place a moratorium on earmarks.  This moratorium will certainly influence the tone for how spending is considered in the 112th Congress. 

As a team who all worked for a senior Senate appropriator, however, we continue to doubt Congress will completely abdicate its right to direct government spending.  A hard ban on earmarks seems unlikely and unworkable.  Even with an agreement to ban earmarks in place, Republican Members are struggling to define exactly what constitutes an earmark and some Republican members are already hedging and suggesting there still may be “wiggle room”, particularly as it may pertain to infrastructure spending.  And then there are several members, especially in the Senate, that have made clear they disagree with the ban and may ignore it completely. 

CLIMATE CHANGE & ENERGY LEGISLATION

We’ve often combined reports on these two issues together given that there was a very real possibility in the 111th Congress that some pieces of cap and trade legislation that were passed by the House could have been folded into energy legislation considered in the Senate. 

With the Republicans in control in the House in 2011, these items will most certainly be decoupled.  The “cap and tax” legislation was a major campaign issue, and should climate change surface over the next two years, it most likely will come as regulatory reform pushed by the Administration.  There will be a great deal of oversight over such efforts in the House, so by no means will climate change disappear in the next Congress, it will just come in a different form.

As for energy legislation, depending on what shakes out in terms of jurisdiction and whether or not Republicans decide to move the issue to the House Resources Committee, you can be sure the “all-of-the-above” approach that has been discussed will be on the table.

WATER RESOURCES DEVELOPMENT ACT & TRANSPORTATION

There is strong indication that a Water Resources Development Act (WRDA) and reauthorization of the surface transportation bill (SAFETEA-LU) will come under consideration by the House Transportation and Infrastructure (T&I) Committee and the Senate Environment and Public Works (EPW) Committee. 

Insightful developments this week include statements by several Republican Members that while they support their caucuses’ pledge to swear off earmarks, they did not think the moratorium on earmarks should apply to infrastructure projects.  Rep. John Mica (R-FL), the likely chairman of the House T&I Committee, is reported by CQ Today to be “wary of a rigid ban.”  Several members suggested that roads, bridges and levees are essential and vital to their districts and made statements during the week to “reserve their right” to ask Congress and the president to approve measures of critical importance to their districts/states. 

With respect to WRDA, several issues come into play for the 112th Congress.  First, although the House T&I passed a bill this year, you can bet Republicans will want to draft their own version of the bill.  The question remains, however, in what form that will take.  The bi-partisan commission on deficit reduction explicitly listed Army Corps of Engineers projects as a target for cuts, and following in the earmark moratorium and focus on fiscal responsibility, it may be tricky to establish a multi-billion infrastructure bill. 

On the Senate side, EPW Chairwoman Barbara Boxer (D-CA) held a hearing this Wednesday entitled "Water Resources Development Act: Legislative and Policy Proposals to Benefit the Economy, Create Jobs, Protect Public Safety and Maintain America’s Water Resources Infrastructure."  The hearing was relatively short and basically highlighted the importance of infrastructure projects to the economy.  Her staff has worked on the Senate’s bill in a bicameral fashion throughout the summer, but because the House will likely start-over with a new bill, it remains to be seen what will happen to the Senate’s version.

They key discussion revolving around transportation authorization is how to pay for it.  Also, as with WRDA, Republicans in the House will likely start the reauthorization process over to put their own stamp and focus on the bill.  Rep. Mica has also indicated an interest in doing more oversight of the Department of Transportation’s funding and administration of projects. In particular, CQ Today reports the incoming committee chairman would like to scrutinize the administration’s handling of the TIGER grant process.

TONY’S TAKE – Will they do anything in D.C.?

I got home last night from a four-day visit to Washington, D.C. where it seems everyone is obsessed with answering the question above.  The logic goes like this:  because the Republicans control the House and have significantly diminished the Democrats’ majority in the Senate, it is a foregone conclusion that nothing will get done in the next session of Congress.  Oh, puh-leeze.

Ok, I understand why people are making those conclusions:  the 2010 election was just barely over when Senate Republican leader Mitch McConnell announced that his number one goal for the next two years was to defeat President Obama in 2012.  And even this optimist isn’t ready to conclude that congressional Republicans, fueled by tea party passion, will suddenly decide to build a bi-partisan agenda with the President in the next few weeks.

Still, I simply don’t buy the conventional wisdom.  I do buy that things are going to be different in Washington, D.C., and that people and organizations seeking to influence Congress will need to change their approach to problem solving in the next two years.

But the notion that nothing will be done is just silly.  So, why do I say that?

First, the Republicans are now in charge of the House, and they will have the opportunity to pass any kind of legislation they want to approve.  It’s a long time between now and November 2012, and America has a series of real problems that need attention – if the Republicans ignore them, they will get their heads handed to them next time.

Second, there is no national appetite for passing big ticket legislation such as TARP, the GM bailout, the stimulus bill, Wall Street reform, and a health care bill.  When politicians think smaller, it’s often easier to work together than when they’re debating bills that cost trillions.

Third, the shift in issue focus is already happening.  This week in D.C., the issue talk focused on:  loan modifications for people facing foreclosure, banning the sale of high alcohol caffeinated beverages, extending the Bush tax cuts for two years vs. making them permanent, breaking up last year’s mammoth energy bill into smaller pieces that can pass separately, passing a budget and then passing the annual spending bills on time (or at least close to it), “fixing/perfecting” the President’s health care law, approving trade agreements, finishing food safety legislation, etc.

Congress and the President will find things to agree on over the next two years.  When President Clinton was in the White House and Republicans controlled Congress, I remember working on all kinds of legislation that passed in a bi-partisan fashion.  Yes, there were always plenty of things to fight about (remember that little impeachment episode?), but we also got some things done.  It can be done if both parties decide it’s in their interests to get things done, and that will come in due time.  Right now, of course, gridlock looks like the most likely outcome, but the election was just two weeks ago, and passions are still running high.  Experience tells me that things will eventually settle down and some real work will get done.

So, what do we do in this environment?  Here are a few suggestions:

• We will need to do more of what we’ve been doing with you during the past several years:  approaching our requests for support as issue management challenges vs. ideas that we give to the congressional delegation for them to manage and push.

• We will need to have a broad community of supporters interested in our projects in order to give such ideas “priority status” with our congressional delegation.
• We will need to prove that the project is vital, that it will provide economic benefits, and that it would never be done without some assistance from the federal government.

• We need to have our own skin in the game.  Coming to Congress with a project that has a variety of local sponsors and partners will move your idea up the queue – entities that hope for full boat funding from the federal government will likely go wanting.

• We need to show we’re ready to engage and interact with all levers of government, and all possible funding sources; including congressional, the Administration, other governments, foundations and private investors. 

• Lastly, we need to ask our friends in Congress to do things that they can achieve.  A powerful and savvy Member of Congress can still do big things, but they need a lot of back office support, and our “asks” need to be in line with what they can do – i.e. having them help with language in bills that set up competitive programs, working the presidential budget process, scouring the federal grants process, and giving our delegation a list of projects where their work “adds value” to the effort (bully pulpit, door opening, advice, counsel and communications assistance just to name a few).

For me, I’m excited about the prospects of the coming year.  As mentioned previously, we see that the Northwest congressional delegation is in prime position to represent our interests.  In the Senate, Senator Patty Murray will continue to be a member of the Democratic leadership and an appropriations subcommittee chairman; Senator Maria Cantwell is growing in seniority and has plum spots on the Finance and Commerce Committees; Senator Max Baucus of Montana is still chairman of the Finance Committee; Senator Mike Crapo is now a very senior Republican on the Finance Committee; Senator Lisa Murkowski of Alaska shocked the nation and won a write-in campaign and will return as the senior Republican on the Energy Committee; and Senator Ron Wyden will continue to be a senior member of the Energy and Finance Committees.

In the House, Rep. Doc Hastings will be chairman of the Resources Committee (and possibly the Energy and Resources Committee); Rep. Cathy McMorris-Rodgers is a member of the House GOP leadership and we’re hoping for more exciting news about her soon; Rep. Norm Dicks remains the senior Democrat on the Appropriations Committee; Rep. Greg Walden of Oregon is one of Speaker Boehner’s top lieutenants and is leading the House Republican transition team; and Rep. Mike Simpson is chairman of the Interior Appropriations Subcommittee.  In short, we have senior people in key spots for our region.

In closing, I want to wish everyone a Happy Thanksgiving.  We’re all fortunate to be reading (and writing) this newsletter because it means we have plenty of things to be thankful for in these troubling times.  We appreciate your business, and we look forward to helping you unlock the mystery of issue management we all will most certainly face in 2011 and 2012.

END

===================================================================================

W2A UPDATE - NOVEMBER 4, 2010

The purpose of this update is to provide a broad overview of the 2010 elections, and do an initial bit of forecasting into 2011 from a policy standpoint.

We begin with an overview of the elections.  If anyone from W2A had suggested in April of 2009 that the R’s would win 60+ House seats and six Senate seats in the 2010 elections, we’re pretty sure that the universal reaction would have been:  those people are nuts.  In fact, we’re quite confident that had we predicted such an outcome just six months ago, the reaction still would have been laughter.

The Republican election victory truly was huge and historic.  And while the Republican wave that rolled through most of the Eastern and Central time zones didn’t quite reach all the way to western Oregon and Washington, there were still definitive signs that the overall Republican message struck a chord with voters in our two blue Northwest states. The policy implications of this election are intriguing and enormous at the same time.

National Overview

At the national level, the most obvious change is that the Republicans will have a solid majority in the House of Representatives. This will give Republicans an opportunity to significantly contribute to the national policy narrative vs. focusing on being roadblocks to the President and Democrats in Congress.  We should expect the House to set its own markers on a variety of legislation including:  economic policy (both parties will be working aggressively to lower the unemployment rate in the next two years), tax policy (extension of the Bush tax cuts, but also other tax code legislation/ideas/etc), energy legislation (likely a pro-market response vs. the President’s cap and trade approach), health care policy (tinkering with the President’s health care plan and seeking opportunities to slow down the rulemaking process that is underway) and deficit reduction/government spending reform. 

In the Senate, the Democrats and Republicans will have to work together to pass ANY legislation because of the 60-vote filibuster rule.  At 53-47, either side can prevent anything from happening.  But here’s a little twist to the Senate that hasn’t been reported widely yet, but will certainly become a focus soon.

In 2012 (sorry to bring politics back into this discussion, but it’s just impossible sometimes), the Democrats will be defending 23 seats, and the Republicans will be defending 10.  Right from the beginning next year, the Democrats will be worried about losing their majority in the 2012 elections, which means that prospect will have an impact on every vote and issue that comes before the body.  Many of those Democratic Senators up for re-election in 2012 come from states where Republicans will have legitimate chances to win.  What all that means is that it will be difficult for the Senate to move any kind of legislation in 2011 without a lot of accommodation on both sides.

From a political standpoint, the unemployment rate will continue to be the dominant barometer that both parties will watch with intensity.  At one level, the President and the Democrats are relieved to be able to share the burden of lowering the unemployment rate with the Republicans; at another level, the President knows that if the unemployment rate stays high, he will shoulder most of the blame, which puts his re-election in jeopardy; and, finally, the House Republicans picked up their seats in volatile regions of the country, so they will need to find ways to make progress on economic issues, too, or the voters in those states could easily swing back to the Democrats in 2012.

We would be remiss if we didn’t remind you that the majority of the W2A team worked in the U.S. Senate during the last time our country had a Democrat in the White House and a Republican Congress.  Those were interesting times, and while the national media (and a lot of political opportunists) were obsessed with President Clinton and Monica Lewinsky, there was a lot of good work done in those days behind the scenes and away from the media spotlight.  Right now, most observers are predicting that gridlock will rule in the 112th Congress, and that the Democrats and the Republicans won’t be able to work together.  On a number of big national issues that might be true but there will also be plenty of opportunities for both sides to work together, especially when it comes to regional issues. 

There is also the possibility that Republicans will be anxious to return to the “business of Congress” to demonstrate they can lead and put meaningful controls on federal spending.  They will want to show they can pass a budget and set spending limits (recall that Congress didn’t pass, let alone produce, a budget in 2010) and they may want to take up key reauthorization bills that have languished in an effort to reign in the Administration. 

As we look at the make-up of our regional congressional delegation, we are actually feeling somewhat bullish about the prospects for movement on key regional issues.  Our region has in place a number of veteran elected officials from all four Northwest states, and we have seniority in both the House and the Senate, and inside both the Democratic and Republican parties.  That means there will be opportunities to get things done on regional issues, but that also means that we here in the region must also work together to bring good projects and ideas to Congress that can withstand public scrutiny, and provide the framework for collaboration for a bi-partisan group of Members from the Northwest.  Given how well many of our region’s Members are positioned, and that we have “bi-partisan seniority”, we believe our region can prosper in Congress over the next two years.

In the House, Congressman Doc Hastings (R-WA) is in line to be Chairman of the House Resources Committee.  Congressman Norm Dicks (D-WA) is in line to be the top Democrat on the House Appropriations Committee.  Congresswoman Cathy McMorris-Rodgers (R-WA) will continue to be a Member of the House Republican leadership team, and she is angling for a seat on the House Energy and Commerce Committee.  Congressman Greg Walden (R-OR) is a top lieutenant to the presumptive Speaker of the House, John Boehner, and has been tapped as the party’s transition leader for the next Congress.  Congressman Mike Simpson (R-ID) is a senior member of the House Appropriations Committee and is in line to be Chairman of the House Interior Appropriations Subcommittee.  Congressman Peter DeFazio (D-OR) is a major player on the House Transportation and Infrastructure Committee and will likely move up to an even stronger position on that committee.  Congressman Denny Rehberg (R-MT) will continue to move up and become a leader on the House Appropriations Committee.  Finally, Congressman Dave Reichert (R-WA) will advance in seniority on the House Ways and Means Committee.

In the Senate, presuming she emerges victorious, Senator Patty Murray (D-WA) will continue to be on the Senate Democratic leadership team, and she will continue to chair the Senate Transportation Appropriations Committee.  Senator Maria Cantwell (D-WA) will be up for re-election in 2012, and will continue to serve on the Senate Finance Committee and the Senate Commerce Committee – both plum spots for any senator, but especially one who might be facing a tough re-election challenge in 2012.  Senator Ron Wyden (D-OR) is poised to rise inside the Senate Democratic caucus, and will remain a force on the Senate Finance Committee and the Senate Energy and Natural Resources Committee.  Senator Mike Crapo (R-ID) will continue his work on the Senate Finance Committee as well as on the Senate Environment and Public Works Committee.  And, of course, Senator Max Baucus (D-MT) will continue to serve as Chairman of the Senate Finance Committee. 

As we complete this memo, two other races in the Northwest remain outstanding.  Congressman Rick Larsen (D-WA) has taken a slight lead over his challenger John Koster, and Senator Lisa Murkowski (R-AK) appears to be in command of the race in Alaska as write-in ballots are accounting for more than 40% of those returned.  If re-elected, Larsen will maintain an important role on the House Transportation and Infrastructure Committee, and Murkowski will likely retain her position as Ranking Member on the Senate Energy and Natural Resources Committee.

Washington state overview

The issue agenda in Olympia has been fundamentally changed by this year’s elections.  The defeat of the income tax, repeal of the soda/candy tax, and passage of the initiative to require a 2/3 majority to pass legislation raising taxes will impact Olympia for years to come on issues relating to taxes and state government spending.  In addition, the Republicans made significant gains in both the state Senate and the state House, which will require the Democrats to work more collaboratively with them in this upcoming session.  Regardless, with the Democrats’

majorities weakened, and the state’s voters making clear that raising taxes is not an option to address the budget mess in Olympia, the Legislature will have to look at much more difficult choices such as limiting services and opening up state employee contracts.

Oregon overview

From a state perspective, Oregon couldn’t be more equally divided.  John Kitzhaber, a Democrat, was elected Governor in one of the closest races for that seat in the state’s history.  And the Oregon legislature is tied in both the state House (30-30) and the state Senate (15-15).  Much like Washington state, Oregon has a severe budget mess at the state level, and with an equally divided government, it is hard to tell how the two parties will work together to solve the state’s problems.  With a new Governor promising change, and co-chairmen and co-leaders in both legislative bodies, the obvious answer would be for both parties to work together and find common ground, but the obvious doesn’t always carry the day when it comes to policy and politics, does it?  We will be involved in a number of issues in Oregon this winter and spring, and will keep you all apprised of how things evolve once the election dust settles and the leaders in Salem sketch out a game plan for 2011.

Conclusion

Without a doubt, this year’s election was historic.  While this memo addresses the lay-of-the-land on a broad scale, we look forward to working with each of you to tailor your government affairs plans accordingly.  There are numerous policy matters, Member interests, and goals to consider nationally and regionally going forward.

END

---------------------------------------------------------------------------------------------------------------------------

W2A UPDATE - NOVEMBER 1, 2010

As promised…

TONY’S TAKE – Time for Predictions!

One of the most volatile election cycles in decades concludes tomorrow, and it’s looking to be a sizable Republican victory.  Polling over the weekend solidified the Republicans’ national advantage, and the only question remaining is “how big will it be?”  We’ll attempt to answer that question for you in this last election update.

NATIONAL POLLING UPDATE:  It is not a pretty environment for the Democrats heading into Election Day.  President Obama’s approval rating is a net negative (46.1 positive to 48.1 negative on the Real Clear Politics average); the Republicans have a strong and unprecedented advantage on the generic ballot (49.8-41.8), and the job approval rating for Congress is abysmal (19.8 approve to 73.8 disapprove).  This election seemed to “set” about three weeks ago, and while the R wave has been in the works since last November when Chris Christie won his race for Governor in New Jersey, the reality of it didn’t set in until the last few weeks.

To me, there are three plausible scenarios for tomorrow night:

• The Democrats hold onto power by the hair on their chinny chin chin.  They lose 35 seats in the House, and five to seven in the Senate.  Six months ago, that would have been considered a huge night for the R’s, but now that would be a huge night for the D’s.
• The Republicans have a great night, and win 45 to 50 House seats, and six to eight Senate seats.  They take control of the House, but just fall short in the Senate.  Still, the number of victories would be historic, and would slow down President Obama and his agenda.
• The Republicans have an amazing night, and win 60 to 75 House seats, and eight to 10 Senate seats.  While the data seems to suggest that this is quite possible, I just have a hard time believing that it will actually happen.

In the end, all three are plausible with #2 being the most likely.

THE HOUSE:   I am predicting that the Republicans take the House.  They will win 45 to 55 House seats, and there is a very real chance that they win several more.  Let’s put it this way:  I would be more surprised to see the R’s win only 35 House seats vs. 75 House seats.  If you’re watching results tomorrow night, here are a couple of races to watch right at 5pm PDT:  if Rep. Barney Frank (D-MA) and/or Rep. Frank Pallone (D-NJ) lose, it’s going to be a huge night for the R’s.  Both are veteran big shots from safe districts, and both are now in very tough fights.  Both are polling below 50 percent, and could be upset on election night.

THE SENATE:  The Senate picture looks better for the Democrats for a couple of reasons:  they have a margin of 10 seats, which makes their majority feel impenetrable, and many of the marquee races are in blue states.  Still, Republicans are poised to make significant gains, and I believe they will pick up eight to 10 seats tomorrow night.  Here is the Senate breakdown:

The Holds/Republicans:  Republicans will hold on to all of their seats, including tough races in Alaska, Florida, Kentucky, Louisiana, Missouri, New Hampshire and North Carolina.

The Holds/Democrats:  Democrats will have a few reasons to cheer tomorrow night         including “holds” in three tough races – California, Connecticut and Delaware.

The “Locks”/Republican Pickups:  Republicans will pick up these four seats for sure tomorrow night – Indiana, Arkansas, North Dakota and Wisconsin.

The toss-ups/Democratic wins:  Of the toss-up races, the Democrats will win in West Virginia.

The toss-ups/Republican wins:  Republicans will win in Colorado, Illinois, Nevada and Pennsylvania.

That puts the R’s at plus-eight with my Washington state prediction coming later in this memo.

KEY NORTHWEST RACES:  The Republicans are poised to win a number of key races here, too, but I must admit that given the strong blue tint in Oregon, and the general wackiness/bizarreness/craziness (pick your favorite term) of the Alaska Senate race, I feel like I’m standing on sand when I make these picks.

Alaska Senate – I will just say this one more time, and then I promise to be done.  If Sen. Lisa Murkowski had spent a little money on opposition research (she spent none), and run one negative ad in the primary (she ran none), we wouldn’t even be talking about this race.  However, she didn’t do those things, and now she needs a write-in campaign to keep her seat.  The winner of the Republican primary, Joe Miller, now looks as fresh as the banana I recently found under the passenger seat in my car (thanks Jake), and there is some possibility that the Democrat (Scott McAdams) slides in and wins this race with 35 percent of the vote.  In the end, I don’t think that will happen.  The Pick:  Murkowski makes history with a write-in victory.

Idaho – 1st CD:  Rep. Walt Minnick (D) vs. Raul Labrador (R).  Minnick looked to be one of the few Democrats who would withstand the wave this year, but a poll out last week had him well below 50 percent.  He was leading (44-41), but I’m thinking he ends up losing tomorrow night.  The Pick:  Labrador.

Oregon – 1st CD:  Rep. David Wu (D) vs. Rob Cornilles (R).  Good district for the Dems, but Cornilles is a great candidate and has a lot of support.  The Pick:  Wu.

Oregon – 4th CD:  Rep. Peter DeFazio (D) vs. Art Robinson (R).  This race has gone national, which caught DeFazio by surprise.  It’s good for 12-term incumbents to have to work hard for their seats, which DeFazio has done.  The Pick:  DeFazio.

Oregon – 5th CD:  Rep. Kurt Schrader (D) vs. Scott Bruun (R).  The 5th CD is a swing district, and is perfectly set up for Bruun in this Republican wave year.  The Pick:  Bruun.

Oregon Governor:  John Kitzhaber (D) vs. Chris Dudley (R).  This race has see-sawed back and forth, and polling last week was all over the map.  Two polls had Dudley up by three points, and one poll had Kitzhaber up seven.  In all of those polls, neither candidate was above 50 percent, and with Kitzhaber looking like an incumbent (he was Oregon’s Governor for two terms from 1995-2003), Dudley will capture most of the undecided voters.  The Pick:  Dudley by a very small margin.

KEY WASHINGTON STATE RACES:  What a ballot we got/had to trudge through this year!  So many interesting and difficult choices in a ballot loaded with issues and candidates.  Tomorrow night should be a very good night for Republicans (just winning a few races here would feel like an accomplishment if you ask me) and potentially a huge night if the R wave crests the Cascades.

The State Legislature:  The R’s will make impressive gains, and could even take the majority in the State Senate.  I am guessing they will end up just short in the State Senate, and that they will significantly tighten things in the State House.  The R gains, plus the results of three key initiatives will lead the Democratic leadership in Olympia (yes, even Speaker Chopp) to re-think/re-calibrate its agenda.  The Pick:  the R’s pick up five Senate seats, and 10 in the House.

I-1098:  It goes down huge.  The Pick:  It will go down 60-40 at least.

I-1107:  The candy and soda tax repeal should also win easily.

I-1053:  The initiative to re-impose the 2/3 majority requirement to raise taxes in the Legislature will win.

Washington – 2nd CD:  Rep. Rick Larsen (D) vs. John Koster (R):  If Barney Frank and Frank Pallone go down on the East Coast, Larsen will go down on the West Coast.  Larsen has run a strong campaign, and Koster has given him many openings to attack him as being too conservative for the district.  The Pick:  The wave is just too big for Larsen to overcome.  Koster wins by a very small margin.

Washington – 3rd CD:  Denny Heck (D) vs. Jaime Herrera (R):  Heck is a very solid candidate, but he’s running in the wrong year against the wrong opponent.  Herrera has run a solid campaign, and has been in control of the race for the last month.  The Pick: Herrera.

Washington – 8th CD:  Rep. Dave Reichert (R) vs. Suzan DelBene (D):  It’s never easy for Reichert, and this year is no different, but he’s also been in command of this race from almost the minute it started.  The Pick:  Reichert.

Washington – 9th CD:  Rep. Adam Smith (D) vs. Dick Muri (R):  Our delegation’s least visible congressman finds himself in a surprising challenge this year.  Smith has outspent Muri at least 5:1, and should win this race unless the R tide is huge.  If Pallone and Frank go down, Smith could as well.  The Pick:  Smith.

Washington – U.S. Senate:  Sen. Patty Murray (D) vs. Dino Rossi (R).  Two weeks ago, I would have said Murray hands down.  A week ago, I would have said Murray, but by a close margin.  Today, it’s tight and the final polls this weekend are mixed.  One poll, conducted Saturday night, from Fox News and Rasmussen Reports has Murray up by two, 49-47.  The other poll was done last night by PPP, which is a Democratic polling firm, and they show Rossi up 50-48.  Both were polls of likely voters.  Fox News was of 1,000 likely voters and PPP was of 2,000 likely voters.  In other words, it’s very close.  [Note:  In 2000, my boss, Slade Gorton, led in all public polling until the very last poll, which showed Maria Cantwell in the lead and at 50 percent.  She ended up winning that race by 2,000 votes.]

In the 2004 Governor’s race, Rossi didn’t lead in any of the public polls until the very last one.  In talking to both campaigns, they each have internal data that shows a win for their candidate, albeit by a very small margin.  My head says Murray (Jeff Bjornstad and his crew have run a very good campaign under very difficult circumstances); my heart says Rossi (it still beats Republican); so I guess I will go with my gut.  The Pick:  Rossi 50.7 to Murray 49.3. 

In the end, undecided voters tend to break against the incumbent at the end, and undecided independents generally follow the wave if there is one, which is why I think Rossi will be ahead when it’s all over.  It won’t be decided on Election Night, and will take a few days to a week to decide.  Rossi’s win will deadlock the Senate at 50-50, which means the Vice President will have to be present to cast votes when there are ties.

Just for a fun comparison, here’s what I wrote the day before the election about Rossi-Gregoire (the same could happen with this year’s race): 

“The candidates:  Dino Rossi (R) vs. Christine Gregoire (D)

The pick:  Rossi

The comment:  A lot of ticket-splitters (people who vote Kerry-Murray-Rossi) will put Rossi into the Governor’s Mansion by a razor-thin margin.  This one might take a while to sort out because over 60 percent of the vote will be absentee and a huge chunk of those votes won’t arrive via mail in election offices until after Election Day (note:  in Washington, absentees just need to be post-marked by 8pm on Election Day to be valid).”

And that’s it friends.  Please send all along your own thoughts and predictions.  I’d love to see them!  We’ll be back post-election with a wrap-up on all of this, and some analysis about what it all means for 2011.  Expect that memo by the end of the week.

END

-----------------------------------------------------------------------------------------------------------------

W2A UPDATE - OCTOBER 19, 2010

Because Congress is out of session and on the campaign trail, we have not included a legislative review in this W2A Update.  But who are we kidding?!  We know what you really want is…

TONY’S TAKE – GOP appears poised for sweeping victories

With just two weeks to go, the Republicans are in a solid position to win races all over the country and at every level of government.  The only question that seems to remain in terms of this election is just how big the wave will be for the GOP, and will it reach all the way to western Washington and Oregon?

This memo will serve as our final big overview of the 2010 elections.  The Friday before the election we’ll produce one more memo that is focused on key Northwest races, and, we’ll throw in some predictions as well for fun.  After the election, we’ll produce a wrap-up memo about the election results, and we’ll dive into what will happen in the lame duck session of Congress, and in 2011 at the state and federal level.

National outlook:  First, we start with some polling numbers that highlight just how difficult a climb the Democrats face in keeping their majorities in Congress.  These numbers come from Real Clear Politics and represent a rolling average of every poll taken on these various subjects:

            President Obama Job Approval:                    44.7 Approve – 49.2 Disapprove

            Generic Ballot Test:                                    48.1 Republican – 41.2 Democratic

            Congressional Job Approval:                          21.2 Approve – 71.6 Disapprove

            Country on Right Track/Wrong Track             30.8 Right Track – 63.5 Wrong Track

The second set of numbers has gotten the most focus because it’s the best barometer for predicting what might happen on Election Day.  Gallup has been asking the generic ballot test question (“do you favor a Democratic Congress or a Republican Congress?”) for over 50 years, and their numbers have rarely been so strongly Republican as they are right now.  Amongst all voters, Gallup has the R’s up 48-43.  In their higher turnout likely voter model, they have the R’s up 53-42, and in their lower turnout likely voter model they have the R’s up 56-39.  After jumping around for most of the summer, and then being even for most of September, the Gallup numbers have been consistent for three weeks, which is why observers are starting to talk more openly about a big Republican wave on Election Day.

To put those Gallup numbers in context:  In mid-October 1994, Gallup had Democrats up by three points amongst all voters, and Republicans up 10 amongst likely voters.  Two weeks later, a Republican tide gave the GOP majorities in the U.S. House and U.S. Senate.  In mid-October 2006, Gallup had the Democrats up by 15 amongst all voters and by 13 amongst likely voters.  Two weeks later, a strong Democratic tide created majorities for the D’s in the U.S. House and U.S. Senate.  Based upon polling right now, the same waves that swept the nation in 1994 and 2006 seemed poised to happen again.

Most political observers are now predicting that the House majority will switch from Democratic to Republican.  The Republicans need to pick up 39 seats to re-take the majority.  There are between 90 and 100 seats that are listed as being competitive.  Of those seats, five to seven of those competitive races are for Republican seats, and 90+ are for Democratic seats.  The number of Democratic incumbents facing difficult elections is jaw-dropping, and includes several veteran legislators who haven’t faced tough campaigns in years.  Right now, the top political handicappers are predicting GOP gains between 45 and 50, and 60+ seats is also considered a possibility. 

In the Senate, the Republicans need to pick up 10 seats to take the majority.  Right now, Republican gains of six to eight seats are considered most likely, but picking up 10 seats is not inconceivable.  And guess where that 10th seat could be?  Yep, you guessed it – Washington state.  The most likely Senate seats to switch parties are:  Arkansas, Indiana, North Dakota, Wisconsin, Illinois, and Pennsylvania. 

The remaining toss-ups are California, Colorado, Nevada, Washington and West Virginia.  The latest polling numbers in those races are:

California:                    Sen. Barbara Boxer (D) 47.0 vs. Carly Fiorina (R) 44.7

Colorado:                    Ken Buck (R) 46.7 vs. Sen. Michael Bennet (D) 44.7

Nevada:                      Sharon Angle (R) 45.6 vs. Sen. Harry Reid (D) 45.2

Washington:                Sen. Patty Murray (D) 50.0 vs. Dino Rossi (R) 45.3

West Virginia:              Joe Manchin (D) 46.5 vs. John Raese (R) 44.0

All five of those races could still go either way, which is why the President is travelling the country at a feverish pace the next two weeks.  Colorado, Nevada and West Virginia have the highest potential to switch, whereas Washington and California will be the toughest for the R’s to take from the D’s.  All five races are so close that anything can happen, including all five going Republican.

Northwest Outlook:  Republicans will have a good night here in the Northwest on Election Day, but it’s not clear yet how great their night will be because of the tight Senate race, a series of tight U.S. House races around the region, a hot Governor’s race in Oregon, and a fight for the state senate majority in Washington.

Washington, U.S. Senate; Sen. Patty Murray (D) vs. Dino Rossi (R):  To me, it still looks like this one goes down to the wire.  The last 10 days of polling has shown the momentum switching to Senator Murray.  Two polls last week had her with solid leads, but a poll out Friday and another out Monday had her lead down to three.  I don’t know exactly where the race stands in the polls, except to say that it’s close – very close.  The Democrats continue to send their top guns here, and millions of dollars will be spent on the airwaves in the next two weeks.  If the Republican wave is a big one like 1994, or the Democratic wave in 2006, Rossi will likely be the winner.  If it’s a strong wave, but not a huge wave, Murray will likely be the winner.

In races for the U.S. House, there are several that bear watching:

WA-1st; Rep. Rick Larsen (D) vs. John Koster (R):  Larsen has a slight lead in this race and both sides are spending a lot of money attacking the other.  If the wave is a big one for the Republicans, Larsen could go down to defeat.

WA-3rd; Denny Heck (D) vs. Jaime Herrera (R):  Herrera is in control of this race and the latest public poll has her with a comfortable lead that is well outside the margin of error.  Unless something changes dramatically in this race in the next week, Herrera should be the victor on Election Day.

WA-8th; Rep. Dave Reichert (R) vs. Suzan DelBene (D):  DelBene has turned this one into a closer race than expected with her advertising.  She is definitely a quality candidate, but Reichert is also running ads now, and he should prevail by a close, but fairly comfortable margin.

WA-9th; Rep. Adam Smith (D) vs. Dick Muri (R):  Here is the sleeper race in the region.  Smith should win this race, but one political website (Real Clear Politics) has moved this race to “toss up” status.  I think that is probably too generous towards Muri, but Smith is facing a stiffer challenge than he ever expected.  Smith has to worry about Republican energy beneath him on the ballot (several races for the Legislature) and above him (all those tax, spending and government reform initiatives, and Rossi will likely do well in Pierce County).  I still think Smith will win, but if you’re looking for an upset special to throw out at out cocktail parties during the next two weeks, this one should be on your list.

OR-1st; Rep. David Wu (D) vs. Rob Cornilles (R):  Republicans have really high hopes for this one because they think Cornilles is a great candidate.  However, Wu has the advantage in the few polls I’ve seen, and the district does have a chunk of downtown Portland in it, which I am guessing will save the incumbent in a tough environment.

OR-4th; Rep. Peter DeFazio (D) vs. Art Robinson (R):  This race is surprisingly close and has drawn a lot of national money.  I am guessing that DeFazio will pull this one out, but like Adam Smith, he could be surprised if the Republican wave is big.

OR-5th; Rep.  Kurt Schrader (D) vs. Scott Bruun (R): The 5th District in Oregon is a swing district, and Schrader won his first term in 2008 in a wave year for the D’s.  This one is close, and some polls have shown Bruun with the lead.  This one is a clear toss-up and could go either way.

Oregon Governor; John Kitzhaber (D) vs. Chris Dudley (R):  Former Governor Kitzhaber and former Trailblazer Dudley are in a battle that is going to go down to the wire.  It will be super close, and it could take a couple of days for this one to be decided.

Alaska, U.S. Senate; Sen. Lisa Murkowski (R) vs. Joe Miller (R) vs. Scott McAdams (D):  Sen. Lisa Murkowski lost to Joe Miller in the Republican primary in August.  She is now running a write-in campaign, and the polls show that she and Miller are in a dead heat with the Democratic candidate, McAdams, running a distant third.  One thing seems clear – a Republican will win this seat.  The question is, which one?  Miller would seem to have the advantage because his name will appear on the ballot, but he is on a clear downward spiral right now, and every day seems to bring more news that can only be considered bad for him.  In the meantime, Sen. Murkowski is now running hard (vs. the lackluster effort she put forth in the primary), and she just might pull this off.  Stay tuned – this one is definitely very fun and interesting to watch.

ID-1st; Rep. Walt Minnick (D) vs. Raul Labrador (R):  In this potentially huge Republican year, a Democratic Congressman might actually hold on to his seat in Idaho of all places.  Minnick has done a good job of being the moderate conservative in this race while Labrador is an extreme conservative.  Minnick has the backing of the Idaho establishment and seems to be in position for victory, although the bigger the wave, the more difficult it will be for him to hold this seat.  For now, it’s still listed as “lean Democratic” by most handicappers, but don’t be surprised if this seat flips in the end.

Washington Legislature, State Senate:  Republican Leader Mike Hewitt did a masterful job with recruiting, which is why the R’s have a real chance of taking the Senate majority in Olympia.  Republicans have to pick-up seven seats to take control (the D’s control the Senate right now by a total of 31-18), and they will come close.

Washington Legislature, State House:  The Democratic majority is much safer in the state House than it is in Senate, but Republicans are poised to make gains.  To take the majority, Republicans would need to pick up 13 seats – they will likely fall short of that kind of gain, but most observers think they will significantly close the gap.  Right now, the make-up in the state House is 61-37, and it sounds like that could drop to more like 53-45 after this election, or even closer depending, again, on how big the Republican wave is on November 2nd .

Washington state initiatives:  The big three from my standpoint are:  I-1098 (the state income tax on high earners), I-1107 (the repeal of taxes on certain kinds of snack foods and beverages), and I-1053 (requires a 2/3 vote for the legislature to raise taxes).  I am focusing on these three because the results of these initiatives will tell us a lot about how the state budget will be managed over the next two years, and potentially longer.  With these three initiatives, voters get to vote on issues and express their overall views on how state government is being managed.  Voters who largely support the tax and spending plans of the Governor and Democratic leaders in Olympia can vote yes on I-1098, no on I-1107 and no on I-1053, while voters who are unhappy with how things are going in Olympia can vote just the opposite.  You can be sure that the results of these three initiatives will impact our state’s political system long after this year’s election is decided.

And that’s it for this final overview of the 2010 elections.  As always, your thoughts and comments are greatly appreciated.  Also, keep an eye out for our predictions memo on Friday, October 29th, and the post-election wrap-up memo on Friday, November 5th.

END

==============================================================================================

W2A UPDATE - AUGUST 30, 2010

D.C. LEGISLATIVE UPDATE

As we predicted in our last W2A Update, activity in Congress prior to the August recess was pretty slim.  But just days after leaving town for the recess, House members were called back to Washington, D.C. for votes on a state aid bill and a border security supplemental appropriations bill.

Since our last report to you there was also movement on the long-awaited financial services bill and Elena Kagen was confirmed by the Senate and sworn in as a Supreme Court justice.  Other top issues for Democratic leadership – including a climate/energy bill, unemployment benefits extenders, possible immigration legislation, and completion of the budget and regular appropriations bills – will all have to wait until after the August recess.  Congress returns for three short weeks in September with a hopeful target adjournment set for early October.  What this really means is that Congress will have about 10-12 working days to address major issues in September before heading back out to campaign for the general election.  Odds are that most major issues will not be tackled during that time, and as such, a lame duck session is very much in the cards.  As we’ve said before, we’ll say it again – welcome to mid-term election year legislating!

What we do know for certain is that a new Congress will begin in January of 2011.  If action does not occur on major or even minor bills by the end of this year, that legislation will have to be reintroduced next year and must make its way through the regular legislative process.

Following are updates on a number of issues as well as Tony’s Take on the primary election results and the initial outlook for November.  On a personal W2A note, we are sad to report that Kelli Scott’s last day with us is tomorrow.  Kelli and her husband are moving to Louisville, Kentucky to start the next chapter of their lives.  We wish Kelli and Brett the best and hope Kelli’s close family ties in Wenatchee and the Puget Sound will bring her back to the Northwest often. 

FINANCIAL REGULATORY REFORM

On Wednesday, July 21st, President Obama signed into law the Wall Street Reform and Consumer Protection Act (Public Law No. 111-203), which Congressional Quarterly called “the most significant rewrite in decades of the rules governing banking and financial services.”  Three Senate Republicans – ScottP.Brown of Massachusetts along with SusanCollins and OlympiaJ.Snowe of Maine – supported the final legislation, ultimately handing Senate Majority Leader Harry Reid the passage he had been negotiating for months.  Wisconsin’s RussFeingold was the only Democrat to vote against the final version of the bill, calling it too weak on banks.  As federal regulators now gear up for a furious round of rulemaking in the coming months, some Republicans are calling for repeal of the Dodd-Frank legislation. 

So what’s in the new law?  Perhaps the most well publicized provision is the creation of a new Consumer Financial Protection Bureau charged with supervising consumer lending, including home loans and credit cards.  The law also gives new power to the Federal Deposit Insurance Corporation, allowing the FDIC for the first time to dismantle large financial companies – an ability that FDIC officials say they could have used at the beginning of the financial crisis.  Under the new law banks will be forced to spin off much of their derivatives trading into separately capitalized organizations.  But as Republicans point out this election season, the law does not address the future of mortgage giants Fannie Mae and Freddie Mac, which are now owned by the government and continue to cost taxpayers billions.

STATE EDUCATION & MEDICAID PACKAGE

On Thursday, August 5th, the Senate passed legislation providing $26.1 billion to states: $16.1 billion to extend increased Medicaid aid to states and $10 billion in education funding aimed at forestalling teacher layoffs.  The House was already in recess by the time the Senate voted, but in a politically risky move, House Speaker Nancy Pelosi summoned House Members back into session (and back to D.C. from their districts).  Her singular goal was passage of the state funding bill and on Tuesday the 10th, the Senate’s legislation easily passed the House despite Republican opposition to further “bailouts” and what they say is reckless spending.  The bill was quickly signed into law by the President later that same day and Members hustled back home.

Democrats argued that the bill, more so than any previous stimulus package, pays for itself through a combination of tax reforms and spending cuts, though there was some concern on both sides of the aisle about those offsets.  The offsets that proved most painful included an $11.9 billion reduction in mandatory spending from ending increased food stamp benefits starting in 2014 and a $1.5 billion reduction in appropriated funds for an Energy Department renewable-energy program.

House and Senate Democrats must have been thrilled about the relatively swift passage of the state funding package after having just been through the messy and prolonged battle over the extension of unemployment benefits. That package was finally signed into law on July 22nd.  It extends federal unemployment benefits for workers who exhausted their normal six months of benefits through November 30th.

BUDGET & APPROPRIATIONS

Since our last report regarding the budget and appropriations, there has been no movement on the former and little movement on the latter.

Before the August recess the Senate held a number of appropriations hearings and mark-ups, and to date, nine appropriations bills of the twelve that must be approved by Congress have been completed by Senate subcommittees (Agriculture; Commerce/Justice/Science; Energy and Water; Financial Services; Homeland Security; Labor/HHS/Education; Military/Veterans; State/Foreign Operations; and Transportation/HUD). 

On the House side, a number of mark-ups have been completed, but the Appropriations Committee has kept the contents of most bills under an embargo until action by the full committee.  Links to each of the bills completed at the subcommittee level can be accessed at the House Appropriations Committee’s website, but know that these documents do not contain the bills’ contents in their entirety.  So far only the Military/Veterans and Transportation/HUD bills have been voted on by the full House of Representatives.

Clearly there is a long way to go before the must-pass appropriations bills are complete.  With little activity on spending bills, Congress will have to pass continuing resolutions (CR) to keep the government funded, and most likely this will happen before each body leaves for the general election.  Several scenarios could occur involving the ultimate passage of these bills – Congress calls a lame duck session; fiscal year 2010 funding levels are applied to all bills; or a CR is passed that moves the spending bills to the 2011 calendar for completion next year.  Any and all of these scenarios have occurred before, so anything is possible.

CLIMATE CHANGE & ENERGY LEGISLATION

Prior to the August recess, climate change and energy legislation received quite a bit of attention – not because these issues actually moved, but because there was a lot of discussion about them.  Senate Majority Leader Harry Reid made an announcement that key energy provisions, many of which were directly related to the disaster in the Gulf, would be considered by the Senate before recess.  However, divisions in his own caucus about how and what exactly to move caused the Majority Leader to pull the idea from consideration.  With that as a backdrop, national environmental organizations and the White House have been intimating the desire to see a bill considered in a lame duck session.  This of course has Republicans and the business community on high alert. 

WATER RESOURCES DEVELOPMENT ACT

On July 29th the Subcommittee on Water Resources and Environment held a mark-up and passed the Water Resources Development Act (WRDA) of 2010.  The bill is currently awaiting action by the full House Committee on Transportation and Infrastructure.  The last WRDA bill to pass Congress was in 2007 and was an override of a Presidential veto.

On the Senate side of the Capitol, staff for the Senate Energy and Public Works Committee have been holding a number of bipartisan meetings regarding the possibility of moving its version of the bill.  It’s possible a hearing could be held on the Senate side this fall, but movement on the larger bill or a mark-up seems less likely.

Some speculate that the issues over a WRDA bill moving have less to do with bipartisan matters and more with bicameral concerns. 

TRANSPORTATION

As we reported at the beginning of the year, work on an extension of the federal surface transportation programs (highways, transit, etc.) was caught up in election-year politics and an overcrowded floor schedule. 

While House Transportation and Infrastructure Committee Chairman Jim Oberstar (D-MN) had pushed hard last year to move a bill, he eventually agreed to pass shorter-term program extensions. Spending authority for Highway Trust Fund programs is currently set to expire on December 31, 2010, making this another must pass before the next Congress. 

Even though conventional wisdom suggests a long-term bill won’t come to fruition until 2011, advocates that feel they’ve waited long enough for legislation are preparing to make the case for lame duck highway reauthorization.  In addition to movement on WRDA, Senate Environment and Public Works Chairwoman Barbara Boxer (D-CA) has indicated she may want to mark-up the Senate’s version this fall.  The House version made it past the subcommittee level in 2009 but has not seen activity since.

The transportation authorization bill and WRDA are often considered the best vehicles for authorizing committees to earmark district-specific projects, and therefore election year victories for members.  Given the short-time frame before the general election, it is doubtful either of these major authorizing bills will move before the adjournment of the 111th Congress, but stay tuned.

KUDOS TO CLIENTS AND FRIENDS

AUBURN

If the boys of summer at the Major League level haven’t kept you interested, then Little League in Auburn passed that test!  After what should be considered a major, major accomplishment, the Auburn Little League team was only one game shy of the World Series Final.  A long fought battle in the West led Auburn to the door of the team from Pearland, Texas, where they lost by only two runs.  Many congrats to the boys of summer from Auburn, Washington!     

CHELAN PUD

There is a lot of good news coming out of Chelan PUD this past month.  On August 3rd, the Chelan PUD Board of Commissioners unanimously selected John Janney as the next general manager of the utility.  John is not only an outstanding individual who we have thoroughly enjoyed working with in the past, but it’s clear with his swift approval that he was the obvious choice to lead Chelan PUD.  In other news, the utility was awarded a $25 million grant from the Rural Utilities Service as part of the federal stimulus program to expand broadband opportunities.  On August 25th, the Board of Commissioners agreed to accept the grant which will enable the utility to expand services to nearly 98% of Chelan County.  Kudos to Chelan PUD!

TONY’S TAKE – Murray-Rossi looks to be thisclose

Just six months ago, Sen. Patty Murray was a lock for re-election to a fourth term.  Then Dino Rossi jumped into the race in late May, which made the race look more interesting – but Murray still looked to be the odds-on favorite for re-election.  After the just-completed primary and new polls out in the last week, it’s quite clear that the Murray-Rossi race is now a toss-up, and headed for a photo finish.

In the August 17th primary, Murray received 46 percent of the total vote and Rossi received 33 percent.  On the surface, that looks that like a pretty solid victory, but Murray was running largely unopposed in her primary, and Rossi had to fend off two challengers for his nomination. 

Still, when all the votes are counted, the total Democratic vote in the primary will be about 52 percent, and the total Republican vote will be about 48 percent.  Given that, doesn’t this seem to suggest that Murray will win in November?

Perhaps, but it’s not quite that simple.  This election is proving to be a very confounding for expert observers.  The electorate is clearly very angry about the direction of our country, and what’s happening in Washington, D.C.  The result of that anger can be seen in two national polling numbers:  first, the President’s approval rating is now upside down, which means that more people disapprove of the job he’s doing than approve, and second, voters say they prefer to see Republicans win congressional seats this fall over Democrats.  Another important number to share is that Republican voters are far more energized to vote this fall than Democrats – by a 2 to 1 margin in a recent Gallup poll.

What all this means is that the road for Senator Murray to get from 46 percent to 50 percent is going to be challenging.  In fact, two polls out after the primary show just how tight the race is going to be:  one poll had Murray ahead 50-46, while another poll (for KING-TV) had Rossi ahead 52-45.

How Does Murray Win?  The Murray campaign needs to keep the race local and about state issues.  If the race is largely about the work our state’s most powerful politician does on issues here at home, I believe that Senator Murray will eke out a close victory.  Her campaign will also seek to label Rossi as an extremist who is too conservative for our state.  Murray’s other advantage could also be overall campaign spending – the Murray campaign already has purchased $3 million in TV time for the last few weeks of the election.  Rossi has a formidable fund-raising machine, but he will be hard-pressed to match the resources of one of the Senate’s top leaders.

How Does Rossi Win?  Rossi hopes to catch the national wave that is building for Republicans.  If the election is about the struggling economy, the Obama Administration’s over-reach on a variety of issues, and the desire for a different direction in Washington, D.C., Rossi will win the election by a nose.  Yes, folks, it’s just simply that close.

Where are the key battlegrounds?  From this observer’s standpoint, I think the critical areas to the race are the following:

• Seattle:  Murray needs turnout in Seattle to be like it is in a presidential year.  If she can do that, her chances of victory will be much higher.  It remains to be seen how turnout will be in base Democratic areas – polling shows those voters to be less interested in this year’s elections than Republicans.  Still, this is Patty Murray we’re talking about – if those voters don’t show up in droves to back her, that means Republicans are having a huge night.  Expect the Murray camp to run a very vigorous voter turn-out campaign in Seattle.

• East King County:  Murray must get 60+ percent in all of King County to win.  If Rossi can keep her at 60 or just under 60, his chances of victory go up significantly.  Murray finished with 58 percent of the King County vote in the primary.  One big worry for Murray is that there are several hotly contested legislative races in East King County that will drive up GOP turnout in those areas.  Rossi’s worry is that Seattle will turn-out big for Murray, and that most Democratic incumbents on the Eastside hold on to their seats.  On Election Night, if Republicans are winning many of those Eastside legislative races, that will be very good news for Rossi.
• Snohomish and Pierce Counties:  Both counties are toss-ups with Murray holding an edge in Snohomish and Rossi potentially holding an edge in Pierce County.  The winner in these counties will also likely be the overall winner.
• Eastern Washington:  Rossi will win Eastern Washington comfortably, and if he can get his victory total above 60 percent, he will be in a strong position to eke out a small victory.  Based upon the primary totals, it seems likely that Murray is going to struggle to reach 40 percent in Eastern Washington – if she falls below 40 percent, she will need to make up those votes elsewhere, which is why East King, Pierce and Snohomish are so very, very important.

Conclusion:  Unless something drastically changes in favor of the Democrats between now and Election Day, this race is headed to the wire, and will end up being a repeat of Gorton-Cantwell 2000 and Gregoire-Rossi 2004.  More to come on this race over the next two months.

Several Congressional Races also look to be close:  Murray-Rossi won’t be the only close one this fall in Washington state; several of our congressional races are going to be close, and Republicans have real chances of turning two seats from D to R in November:

• 2nd Congressional District, Rep. Rick Larsen (D) vs. John Koster (R):  In the primary, Koster actually finished ahead of Larsen by nearly 200 votes.  The two both finished with 42 percent of the vote, and while the total Democratic vote in the primary was 52 percent, I think it’s going to be hard for Larsen to capture all of those undecided voters in the general.  This race should go down to the wire, and will be incredibly close.  Tony’s Take:  Toss-up.
• 3rd Congressional District, Denny Heck (D) vs. Jaime Herrera (R):  This is an open seat battle (Rep. Brian Baird is retiring), and is on the national radar screen as one of the Republicans’ top targets for takeover.  The Democrats have a solid nominee in Denny Heck who was a state legislator, served as Gov. Booth Gardner’s Chief of Staff, and started TVW.  He has been able to raise money, but he faces an uphill battle because of the year – he is struggling to find a message that pleases base Democrats (i.e. liberals in Thurston County) and moderates (i.e. “old school” Democrats in Lewis, Cowlitz and Clark Counties).  Republicans do well in the 3rd CD (Gorton, Bush, Rossi and McCain all won here), and the Republican nominee is a true rising star.  Herrera is 31, Hispanic, and a state legislator from vote-rich Clark County.  She is an excellent speaker and rolled past two opponents to win her primary.  A poll out last week shows her leading 54-41 over Heck, and one national observer moved this race last week from “toss up” to “tilt Republican.”   Tony’s Take:  Likely Republican.
• 8th Congressional District, Rep. Dave Reichert (R) vs. Suzan Delbene (D):  Reichert is used to close races, and this one should be no different, but he appears to be in good position to win this fall.  He finished his primary with 47 percent of the vote, and the overall Republican vote in the primary was 58 percent.  Delbene has deep pockets, but her primary performance shouldn’t instill much confidence in her supporters – she finished with just 26 percent of the vote in the primary against token opposition.  Reichert should win this one with his highest total yet, but the race still deserves watching, and could be closer than expected if Delbene’s campaign can find its rhythm. Tony’s Take:  Likely Republican.
• 9th Congressional District, Rep. Adam Smith (D) vs.  Dick Muri (R):  In a normal year, Smith would be a lock for re-election, and while I think he will be successful this fall, I also think this race deserves some special attention. In the primary, Smith got just 51 percent of the vote, which is signal that voters in his district are willing to look at someone else for his job.  Muri is on few people’s radar screens, which means he will be underfunded and won’t be able to match Smith’s campaign.  All of that means that Smith should be fine, but this is no normal election year, and if there is a huge Republican wave, he could find himself in a nail-biter on Election Day.  Tony’s Take: Likely Democratic.
• The other incumbents:  Reps. Norm Dicks, Doc Hastings, Jay Inslee, Jim McDermott and Cathy McMorris-Rodgers are all safe this fall and will be re-elected easily.

And that’s it for this version of Tony’s Take.  We will be back soon for a quick update on these races, and our first look at races for the state legislature.  We’ll also take a quick look at big races around the region, and provide our first update on the national scene.

END

 

W2A UPDATE - APRIL 7, 2010

D.C. LEGISLATIVE UPDATE

Congress returned home last week for a two-week recess and the start of the next battle over the recently passed health care reform legislation – defining what the new law means for skeptical voters between now and the November midterm elections.  Congressional Democrats hope this month’s town hall meetings and other public events look absolutely nothing like the heated spectacles of last August, when Sarah Palin’s “death panels” and other claims about the House’s health care bill had many Americans distrustful of the process and confused about the substance of the bill.  Republicans, meanwhile, are pushing a “repeal and replace” strategy.

In addition to selling their new health care law, Democrats will spend a good deal of time this recess talking to constituents about jobs, financial industry reforms, and other popular legislation they plan on advancing promptly upon returning to Capitol Hill in mid-April.  The annual appropriations process, however, probably won’t go much of anywhere until after the election.  Below are our thoughts on these issues, as well as Tony’s Take on the always unpredictable election year politics shaping up in DC and here at home.

HEALTH CARE REFORM

Late on the night of Sunday, March 21st, the House of Representatives approved the sweeping health care overhaul legislation that was passed by the Senate on Christmas Eve. (The Drudge Report’s headline: “A Date Which Will Live in Infirmary.”)  The landmark legislation, which will extend insurance coverage to nearly 32 million people and end insurance company discrimination against people with pre-existing conditions, passed over the unanimous opposition of Republicans.  That same night, the House also passed a package of changes to the Senate health care bill that had previously been negotiated between House and Senate Democratic leaders.  That bill went back to the Senate, was passed days later under the reconciliation process, and the whole thing has now been signed into law by the President – 1,033 days after he first called for action on health care.

While just one month ago the likelihood of passing health care reform seemed dim, a couple of very positive things happened for Democrats just days before the Sunday night vote in the House. First, a handful of Democratic Members who had previously been opposed to the reforms came out in support of the bill.  Second, the Congressional Budget Office released its cost estimates for the bill that showed it would reduce federal budget deficits by $143 billion in the next 10 years, which completely changed the tone of the discussion.  Also that week, a group of Catholic nuns broke from their church’s more conservative group of bishops by endorsing the bill, arguing that it would do nothing that would make abortion more widely available.  And just hours before the vote, Democratic leaders struck a crucial deal with pro-lifers within the party that secured the final votes needed for passage by promising an executive order that federal money could not be used for abortions. 

Some of the law’s provisions will affect Americans almost immediately, for example the requirement that insurers allow dependent children to remain on their parents’ plans up to the age of 26.  But most Americans won’t see many substantive effects of the law for years to come.  The political repercussions of the health care legislation, however, will play out over the next several months, with the biggest test of its political success or failure coming on November 2nd – midterm election day.  Interest groups are already ramping up campaigns to market the new health care law in advance of the election. 

APPROPRIATIONS

In a bit of election year anti-earmark fervor, three weeks ago House Democrats announced a ban on congressionally directed funding in appropriations bills (better known as earmarks) for for-profit entities. In an effort to one-up the ban, House Republicans announced a purity test of their own the next day – no one in the Republican caucus will be requesting ANY earmarks this year. While all this posturing may be good politics it may also be totally moot. The word from folks on the Hill is that House Appropriations Committee Chairman David Obey (D-WI) has no intention of moving most of the 12 annual appropriations bills forward until after the midterm elections.  The politically popular Defense, Military Construction/Veterans Affairs, and perhaps Homeland Security Department bills are the most likely to actually pass before November.  Obey is staying quiet on the subject for now, hoping to paint Republicans as obstructionists. On the Senate side, Appropriations Committee Chairman Daniel Inouye (D-HI) thinks the House’s efforts are ridiculous, as they essentially give up one of the greatest powers of the Legislative Branch. But there, too, it is unlikely that many of the spending bills will move until after the election.

While all of this earmark action gives lobbyists across DC heartburn, Washington2 Advocates is fortunate in that most of our clients’ federal affairs programs do not rely solely on the earmark process for funding – a smart strategy in these times of earmark instability. And so while we have and will continue to work with our Congressional Delegation to advance our clients’ goals within the regular appropriations process, we also remain focused on identifying alternative sources of federal support.

FINANCIAL REGULATORY REFORMS

With health care finally in the rearview mirror, the focus in Congress on reforming the financial industry has never been greater.  The Senate Banking Committee approved Chairman Chris Dodd’s (D-CT) far-reaching financial industry reform bill (the Restoring American Financial Stability Act) on a party-line vote last month, as expected.  There were no deep policy discussions, no debating the merits of various measures contained in the bill, and – in a risky strategic move – Republicans declined to offer any of the 200 or so amendments they had crafted.  The entire session lasted 21 minutes and was purely a formality, as Dodd has previously stated that negotiations with his Republican counterparts have broken down.  The current plan is to move forward with those negotiations, not in small committee sessions, but instead on the floor of the Senate, where Dodd hopes to bring his bill shortly after Congress returns to session later this month.  

The problem with moving the legislation ahead without any Republican support is that the Senate floor – with its C-SPAN cameras and 100 senators jockeying for the spotlight – is not nearly as conducive to thoughtful debate of complex issues as a committee room populated by members who have studied the bill for months. 

Meanwhile, the President continues to meet with Dodd and House Financial Services Committee Chairman Barney Frank (D-MA) to discuss ways to merge the two chambers’ bills and pass final legislation before the August recess.  The House passed its version of financial regulatory reform in December. 

While both the House and Senate bills address the same general issues – establishing a system to avoid future taxpayer bailouts of failing financial firms, strengthening consumer protections and instituting new rules for trading derivatives — they differ in many ways, most notably over how to establish a consumer protection agency to oversee financial products.  And Republicans say the Senate bill does nothing to end the problem of “too big to fail” firms, an issue that will have to be hammered out in the coming months.

JOBS BILL(S)

Just before leaving town for Christmas in December, the House passed a jobs bill – or second stimulus – worth $75 billion in new tax credits, unemployment benefits, and infrastructure (“jobs creating”) measures, to be paid for by reductions in TARP borrowing authority.  The vote was 217 to 212, with many moderate Democrats joining the Republicans in opposition in order to avoid the wrath of constituents angry about government spending.  With such a slim margin of passage, and with the election of Republican Scott Brown to Ted Kennedy’s Massachusetts Senate seat in January, the fate of the jobs bill was thrown into question as congressional Democrats were forced to re-evaluate their legislative priorities in a new political landscape. 

Attention turned to the Senate where, in early February, Senate Majority Leader Harry Reid (D-NV) first killed an $85 billion bipartisan jobs bill, then offered a far narrower $15 billion bill that included just four basic provisions:  Build America bonds, a small-business tax program that allows quick expense write-offs, a one-year extension of surface transportation programs and a bipartisan tax-credit deal.  After weeks of negotiations, eventually the Senate produced an $18 billion bill and, in a rare bipartisan achievement, passed the bill (HR 2847) on March 17th (by a vote of 68-29).  The President signed it into law the next day.  The Hiring Incentives to Restore Employment (HIRE) Act is intended to spur employment by providing incentives to hire workers.  At its core is a program that will give companies a break from paying Social Security taxes for the remainder of 2010 on any new workers they hire who had been unemployed for at least 60 days.   In addition, the bill extends federal surface transportation programs through the rest of the year.

On March 24th, the House passed the second measure in the Democrats’ “jobs agenda” – a $16.8 billion package of tax incentives for state and local governments and small businesses aimed at making a dent in unemployment numbers and improving infrastructure. While all but four Republicans voted against the bill (HR 4849), more and more members of both parties seem eager to cater to populist sentiment by passing anything “jobs”-related as their political careers are on the line.  Expect more such measures in the coming months.

CLIMATE LEGISLATION

While health care reform sucked up all the oxygen in Congress in recent months, lead climate negotiators – Sen. John Kerry (D-MA), Sen. Lindsey Graham (R-SC) and Sen. Joe Lieberman (I-CT) – continued to meet behind the scenes in an effort to gin up support for cap-and-trade legislation.  The Kerry-Graham-Lieberman proposal that is now emerging is similar to the climate bill that passed the House last June (H.R. 2454) in that it would put a cap on greenhouse gas emission starting in 2012, with the goal of reducing emissions by 17 percent by 2020 and 80 percent by 2050.  But the Senate proposal would put different kinds of limits on different industries, and negotiators are now also considering ways to manage volatility in a carbon market by placing a ceiling and a floor on possible emissions prices (an idea championed by Sen. Maria Cantwell). 

The proposal includes several provisions that are tough for environmentalists to swallow, like expanded oil and gas drilling.  And President Obama in recent weeks has taken a page out of the Bill Clinton “triangulation” playbook by coming out in support of energy policies that the GOP has long fought for.  By supporting expanded offshore oil drilling, nuclear energy, and new coal technology – the so-called “all of the above” approach to energy policy – Obama is essentially daring Republicans to oppose their own agenda. 

The question now is whether or not congressional Democrats have the stomach for another tough vote this year.  But with Republicans projected to pick up seats in the House and Senate in November, Democrats may be looking at 2010 as their last chance to pass a climate bill for the foreseeable future.  Whether or not they can actually move a bill this year is still unknown, but we can expect to see various climate proposals float around the Hill for the next several months. 

IMMIGRATION REFORM

On March 21st – the same day that hordes of tea partiers and other anti-health care reformers protested on the Capitol grounds – thousands of immigration reform advocates staged a major march of their own on the National Mall demanding Congress take quick action on comprehensive immigration legislation.  The march was also directed at President Obama, who made campaign promises to address reform but who has stayed away from the issue since taking office, referencing immigration in just one sentence of his State of the Union Address in January.

Sen. Charles Schumer (D-NY) and Sen. Lindsay Graham (R-SC) last month outlined an immigration legislation plan with four basic elements: create tamper-proof biometric identity cards for all workers to prove they are eligible to work, improve border security and enforcement, create a process for admitting large numbers of temporary workers, and create a way to legalize the estimated 11 million immigrants who are here now illegally.  The President said the plan “should be the basis for moving forward,” and pledged to “do everything in my power to forge a bipartisan consensus this year.”  For now, though, Graham seems to be the only Republican on board and divisions continue to run deep even within the Democratic caucus on the issue of reform. 

From the National Journal’s Hotline OnCall editor (and friend of W2A) Reid Wilson: “Democratic leadership has asked their members to take difficult votes on the stimulus package, cap and trade legislation and health care reform. Bringing up immigration would be another unpopular measure that would almost definitely rile up the conservative base and widen the enthusiasm gap between Republican and Democratic voters. If Democrats bring up immigration reform this year, it would be political malpractice.”

KUDOS TO CLIENTS AND FRIENDS

Congratulations to the Washington State Potato Commission – and a big thanks to Sen. Patty Murray for submitting a request for critical potato research funding to the Senate Appropriations Committee on behalf of the Commission. 

And in the “friends” category, Washington state’s very own Rep. Norm Dicks last month became the Chairman of the powerful Defense Appropriations Subcommittee after serving on the Appropriations Committee since first coming to Congress in 1977.  Rep. Dicks will continue to serve on the Interior and Environment Appropriations Subcommittee, which he had been chairing before the unexpected death of former Defense Chair John Murtha (D-PA) in February.  Congratulations go to Rep. Dicks and his staff for this very big promotion!

TONY’S TAKE – No health care bounce for Dems

Passage of health care reform provided some much needed relief and political momentum for President Obama, but polling done over the last week suggests that congressional Democrats will still face a strong and persistent “head wind” in this November’s elections.

My favorite political website, www.realclearpolitics.com, has several useful benchmarks that highlight the challenge facing Democrats this fall.  RCP averages all polling on various issues and individuals which makes it easier to judge really where the public stands on any given matter.  One poll is helpful but doesn’t provide the perspective that comes with looking at a series of polls.

On health care, the RCP average is 40.4 percent favor the Democrats’ health care bill, and 52.1 oppose it.  One new poll out this weekend from CBS News was even worse for the Democrats.  In that poll, 32 percent favored the new bill and 53 percent opposed it.

As for President Obama’s approval rating, he was stuck around 50 percent approve and 45 disapprove before the bill passed, and he has gone down a bit since he signed health care reform into law.  His RCP approval rating average right now is 47.9 approve and 45.9 disapprove. One year ago, the President’s approval ratings were in the mid-60s and his disapproval was in the high 20s.

As troubling as those numbers are for congressional Democrats, what really has them worried about this fall is that independent voters are turning towards the Republicans. 

Congressional approval ratings, which are notoriously low, just keep going down.  The RCP average right now for Congress is 18.5 approve and 76.2 disapprove.  Those numbers have been dropping throughout the year, and highlights how voters of all stripes have a negative view of Congress.  One year ago, these numbers weren’t good – congressional job approval was in the upper 30s and disapproval was in the 50s – but, in comparison, those numbers are still dramatically better than where they stand today.

But the big disturbing number for members is what’s called the “generic ballot test.”  This question asks voters which party they intend to vote for in the coming congressional elections.  Those numbers strongly favored Democrats in the months leading up to the 2006 and 2008 elections, and we saw what happened.  Those numbers are now in favor of the Republicans, and while the margin is small (the RCP average on the generic ballot test is 45.6 Republican and 43.3 Democratic), the trend lines are strongly in the R’s favor.  A year ago, Democrats still led on this question by three to five points, and prior to the 2008 elections, they led by 10+ points.

I chalk this shift in voter attitudes up to three things:  voters like divided government (expect to hear a lot about that subject from Republican campaigns this fall), voters are worried about the size and scope of the Obama proposals, and voters are really nervous about the economy and their perceived lack of attention paid to that issue by the Congress.

For now, the Democrats are fortunate that the election is still several months away, and when Congress comes back into session next week, you can expect a flurry of proposals that are designed to help grow the economy and spur job growth.  Also, the improving economy should provide some hope for Democrats this fall – if the economy continues to improve, the stock market keeps rising, and unemployment keeps going doing down, that will help the Democrats hold down their losses.

At this point, I’m not sure how many Senate and House seats the Republicans will win this fall, and whether they can take back the House majority from the Democrats.  While voters are indicating that they plan to vote Republican this fall, I think that represents a shift away from the Democrats vs. a shift towards Republicans.

There is still time for the Democrats to avoid an absolute bloodbath this fall, and given their performance of the last several years, there is still plenty of time for the Republicans to have a significant mess up that prevents greater success for them this fall.  Still, right now, the signs point toward big Republican victories.

END 

W2A Update - January 15, 2010

Happy New Year! From the entire team at W2A, we wish everyone a happy, healthy, and successful 2010.

Our last report to you was at the end of October, 2009. November and December didn’t produce much in Congress that wasn’t covered by nearly every major media outlet, and because votes actually occurred in the U.S. Senate on Christmas Eve, we decided to wait until the New Year to produce another W2A Update.

D.C. LEGISLATIVE UPDATE

The House kicked off the second session of the 111th Congress this week, and the Senate will convene next week. Here are the 2010 House and the 2010 Senate calendars. Although Democrat and Republican retreats over the next two weeks would suggest a light start to this Congress, the agenda for 2010 is anything but light.

In addition to completing work on historic health care reform, House and Senate Democrats hope to focus on the economy as soon as possible. But a very stacked agenda may prove to be the biggest obstacle to quick action addressing jobs and unemployment. Issues such as national security and terrorism, financial services reform, climate change, the war in Afghanistan, and immigration reform, to say the least, will all remain high priorities for this session.

Below are our thoughts on the big issues before Congress this year – where the debates stand now and where we think they will go in 2010.

HEALTH CARE REFORM

The reason, of course, that the U.S. Senate was voting on Christmas Eve was health care. While probably most of America was trying to get a turkey or roast in the oven on time, the Senate moved to address the long-awaited health care reform legislation with little room to spare.

Since that time, leaders in both the House and Senate have been considering how to reconcile two very different bills with the White House in hopes of completing work on the issue before President Obama’s State of the Union address. Instead of the customary process of establishing a House-Senate conference committee on the bill, leaders are in the process of negotiating a final bill amongst a handful of elected officials and the White House. This proposition, naturally, has stirred up all sorts of political mudslinging as Republicans have cried foul for being locked-out of the process, and many interested Democrats are also unhappy. These discussions are just underway, so stay tuned.

APPROPRIATIONS AND JOBS FOR MAIN STREET/STIMULUS II

ll the regular FY10 appropriations bills were completed by year-end as the Transportation-HUD, Financial Services, Labor-HHS, MilCon-VA, and State Foreign Ops bills were rolled into HR 3288, the Consolidated Appropriations Act for 2010. Even as the second session of the 111th Congress gets underway, House and Senate offices are putting the final tweaks on, and in some cases, have already released their forms for FY11 appropriations requests.

In addition to the regularly funded appropriations bills, the House also passed what has been referred to both as the Jobs for Main Street Act and/or Stimulus II. On a very slim margin, the bill passed the House on December 16th by a vote of 217-212.

The bill passed with much less fanfare than its older sibling. This is in part because the vote was so close to the holidays (and so close in and of itself), and in part because that there is some debate over whether the redirection of $75 billion in unspent TARP funds used to pay for the legislation really “costs” the Treasury. The bill was reviewed by the Congressional Budget Office since its passage, and depending upon value assumptions on unspent TARP funds, the legislation either increases total deficits by $64.9 billion over ten years, or $139.9 billion over ten years.

With such little bi-partisan support, and with even questionable Democrat support, there is speculation that the Senate will either wait to see a formal request from the White House (a.k.a. look for something associated with the President’s FY11 Budget request), or could consider attaching a “stimulus” package onto a supplemental request for additional funds for Afghanistan. With Republicans more likely to support the latter, and Democrats the former, this is one mechanism leadership could use to pass Jobs for Main Street/Stimulus II.

ENERGY REFORM/CAP AND TRADE

Also since our last report, the United States participated in the long-awaited climate change summit in Copenhagen. Depending on who you talk to, the conference was either a great “first step”, or it was a “do nothing” event. While at the summit, the U.S. committed to help mobilize $100 billion in annual funding by 2020 to help poor countries cope with global warming. At the same time, however, the ultimate goal of forging a world-wide consensus approach to climate change was not achieved.

While there has been no movement on climate legislation in Congress, only days before the Copenhagen summit commenced, the Environmental Protection Agency (EPA) announced its endangerment finding on greenhouse gases. This was followed by EPA’s proposal to increase smog standards that was introduced just last week. Additionally, at least a handful of other federal agencies including the Departments of Transportation, Interior, Housing and Urban Development, the Securities and Exchange Commission and the Council on Environmental Quality are working to follow-through on a government-wide strategy to curb climate change through the rulemaking and regulatory processes.

Again, with so many close votes on hotly debated issues, we anticipate clunky attention in the Senate on climate change this year, but instead, predict activity will continue to occur (and even increase) at the regulatory level. Keep in mind, though, that because the Senate moved energy related legislation in two separate bills, it’s possible the “low hanging fruit” in the Senate Energy and Natural Resource’s American Clean Energy Leadership Act could find its way to the Senate floor this year.

FINANCIAL REGULATORY REFORMS

Senate Banking Committee Chairman Chris Dodd (D-CT) surprised Washington, D.C. last week by announcing his retirement at the end of the year. How his decision will affect the landscape for financial regulatory reform in the Senate is still unknown. Some speculate that it will free Dodd from concerns about pleasing his left-leaning base back home and will result in a more industry-friendly bill. The Consumer Financial Protection Agency – a key piece of the legislation favored by the White House and by House Financial Services Chairman Barney Frank (D-MA) – may be the first thing to go as Dodd and his committee members meet this month to craft a final bill. Scrapping the new agency will come with conditions, however, as Dodd is apparently asking Republicans to support beefing-up a consumer protection office within another agency.

The House passed its version of financial regulatory reform in December. The President had wanted a bill on his desk before his yet unscheduled State of the Union address, though this is looking unlikely. A source close to the committee has said that “February is for talking and March is for paper,” according to Politico. Democrats will ultimately have to push something through conference before the August recess so they’ll have a populist win to campaign on over the summer.

TRANSPORTATION

Progress on an extension of the federal surface transportation programs (highways, transit, etc.) is bogged down by election-year politics and an overcrowded floor schedule.

While House Transportation and Infrastructure Committee Chairman Jim Oberstar (D-MN) pushed hard last year to move quickly on a long-term authorization bill, he has since backed off and has signaled a willingness to pass shorter-term program extensions. Spending authority for Highway Trust Fund programs is currently set to expire at the end of September 2010, and Hill staff tell us not to expect a long-term bill until 2011. In the meantime, any other short-term extensions will undoubtedly be “clean” of earmarked projects. States, cities and transit agencies across the country that were counting on those earmarks are now turning their focus toward the new Jobs for Main Street/Stimulus II that Democrats are pushing forward as it would contain funding for infrastructure projects. Though, again, the future of that legislation is murky, too.

TONY’S TAKE – The Political Pendulum Has Officially Swung

For the first time since August 2005, Republicans in Washington, D.C. are having fun again.

That’s the take-away from my just-completed trip to Washington, D.C. this week. While the news from Haiti brought a healthy dose of sober reality back to our nation’s capital, the top political news continues to be the Democrats’ rapid descent. Just preceding, and then during my trip to Washington, D.C., the following things happened:

· Senate Majority Leader Harry Reid struggled to manage four political challenges all at the same time: his “poor choice of words” about President Obama’s skin tone and speaking style, his faltering poll numbers (two polls out this week have him trailing his little-known challengers by 10+ points), two front page national news stories about the impact that his political trouble involving his son’s campaign for Nevada Governor (two Reids on the Nevada ballot in 2010 is apparently not going to be a good thing), and the ongoing struggles the Democrats have in completing a health care bill. So far, 2010 has not been fun or kind to Senator Reid and his staff.

· The special Senate election next week in Massachusetts to fill Ted Kennedy’s seat is suddenly in doubt as polls showed the race to be a dead heat, and both parties suddenly dumped millions of dollars into the Bay State for the final week of the election. The unexpected closeness of the race already has Republicans crowing, and while most observers expect the Democratic candidate to eke things out in the end, it is pretty extraordinary that this race is even remotely close given the politics of Massachusetts.

· President Obama’s approval rating continues to slide and was under 50 percent in a whole host of polls released this week. The constant downward creep in the President’s job approval ratings only makes it more difficult for Democratic Members of Congress to keep their own jobs.

· Democratic retirements in Congress continue to cloud an already cloudy forecast for Democrats in the 2010 elections. Senators Chris Dodd of Connecticut and Byron Dorgan of North Dakota both opted to retire than lose this year, and rumors abound that more House retirements could be coming in the next few weeks.

· Finally, there was some good news for the Democrats in all this bad news. The Dodd retirement actually dramatically improves their chances of keeping his seat this fall because the popular Connecticut Attorney General can now run. Still, when the best news you’ve got is turning a lemon into lemonade, you know it’s been a tough week.

So, with this as a start to 2010, what does it mean for the rest of the year? Unfortunately, for all of us who were hoping that this year would feature much less drama than either 2008 or 2009, it appears to me that we’re probably going to be disappointed.

This year is just two weeks old, and the amount of surprising news seems over-the-top. Whether it’s the impossible-to-process news from Haiti, the reality that terrorism is on the rise and our government is still struggling with how to share national security intelligence amongst various agencies, the crazy Jim Mora-Pete Carroll-Lane Kiffin coaching carousel, unemployment stuck at 10+ percent, the new reality of $1+ trillion annual federal deficits, or the aggressive action taken upon Google by the Chinese government, it seems pretty clear to me that this year is going to be another one that stretches our ability to define what “normal” is and should be for American families.

For families and business owners, we will do what we always do – continue to circle the wagons, focus on our core values and talents, and work hard to get through these challenging times. Here at W2A, we feel very fortunate to be heading into 2010 in a strong position – we had 100 percent retention with our existing clients (thank you everyone!), and we have added six new clients over the last two months. As always, but even more so in these troubling times, we feel blessed by your faith in our work, and your support of our business and families.

For the political world, this year looks very uncertain indeed, and I think that uncertainty extends to both parties, not just the Democrats.

To be certain, the Democrats face a very difficult year in 2010. There is a very real possibility that the Republicans will take back the majority in the House of Representatives. A year ago, that possibility seemed beyond preposterous, and now it seems a 50-50 possibility. On the Senate side, the Democrats face a loss of several seats this fall. While their majority still appears safe after November, it is quite possible that they will go from the 60 seats they have now to 55 or less seats following this year’s elections.

For incumbent Republicans, my counsel would be to temper your giddiness over the falling fortunes of the Democrats, and keep a close eye on potential primary challenges. The “tea party” Republicans preparing to run in 2010 are drawing their first arrows upon Republicans in the form of primary challenges to GOP congressional incumbents, and if ever an election year seemed poised to create opportunities for independent candidates in select congressional districts, 2010 would be that year.

All of these new political realities mean that the legislative outlook for this year is very cloudy. Every big ticket item from health care to climate change to a second stimulus bill faces a difficult road to completion. Of course, there will be plenty of other action this year that will find success, but it will be “kitchen work.” Appropriations bills will be passed; efforts to ease unemployment will be produced and pushed; regulations will continue to be created, revised and enforced; and elected officials will work hard to be visible on regional issues.

And, in November, we will have what will be another hard-fought, and quite possibly, historic, election.

In other words, it’s going to be a busy year in the world of government and public affairs, and a very unpredictable one, too.

END

 

W2A Update - September 7, 2009

D.C. LEGISLATIVE UPDATE

With the August recess in Congress’ rearview mirror, following is a quick update on the issues that either had action right before adjournment, or dominated the headlines throughout the summer break.

In general, as the House and Senate return for session, the agenda starts with health care, moves then to climate change, followed by financial regulatory reforms. Democratic leadership hopes for action on all of these by year’s end. Looking longer term, there could be movement on tax bills (extenders and/or bigger, more complex bills), and there is some talk about immigration reform down the road. As we will report later in the W2A Update, work also remains on the annual appropriations bills as well.

HEALTH CARE REFORM

It was hard to ignore the August action on health care reform as town halls took center stage across the country. For more political analysis, be sure to read Tony’s Take.

The White House will keep the pressure on as the President addresses a joint session of Congress this Wednesday. All eyes will turn next to the Senate Finance Committee which has yet to produce a draft for committee markup. Senate Finance Chairman Max Baucus’ (D-MT) hopes for a bipartisan bill seemed to dim over the August break as key Republicans in the “gang of six”, the group of Senators working on a bipartisan accord, seemingly cooled towards the prospects of an agreement. With or without bipartisan support, Senator Baucus has pledged he will hold a markup on Tuesday, September 15th.

Republicans aside, Democrat leaders will have their hands full herding the cats in their own party. While inclusion or exclusion of a “public option” has received the most attention, there are plenty of contentious issues to sort out, from impact on the deficit, to abortion, to geographical differences in health delivery and payment. The town halls held across the country also served as a forum for Members of Congress to define their positions on many issues which may make it harder to compromise when back in Washington, DC. It is certain that health care reform will continue occupying the Congressional agenda through the end of the year.

ENERGY REFORM/CAP AND TRADE

As Congress prepared to adjourn for the August recess, the American Clean Energy and Security Act (H.R. 2454) had passed the House, and the Senate Energy and Natural Resources Committee had completed work on the American Clean Energy Leadership Act (S. 1462).

Much of the anticipation on this issue over the past months has been with the Senate Environment and Public Works Committee, but because of the bill’s complex nature and range of jurisdictional issues, the matter cross-pollinates with a number of committees. All eyes were on Environment and Public Works Chairwoman Barbara Boxer (D-CA), however, when she announced before the recess that no activity on climate change would occur in her committee until September. At the time she anticipated that a bill would likely be released before Congress was back in session this week.

Just last week, however, Senators Boxer and John Kerry (D-MA) (Chairman of the Senate Foreign Relations Committee), announced they would not introduce a bill for consideration until late September. This runs counter to Majority Leader Harry Reid’s (D-NV) initial timetable for completion by the six committees with jurisdiction by mid-September.

The six committees with jurisdiction include of course the Environment and Public Works and Foreign Relations Committees, but also Agriculture, Commerce, Finance, and Energy and Natural Resources. Reports from the Majority Leader’s office indicate a strong desire to complete the legislation by year’s end, although the Senate Finance Committee will be fully engaged in health care upon Congress’ return.

FINANCIAL REGULATORY REFORMS

President Obama’s plan to overhaul the nation’s financial regulatory structure – announced in June – has run into some serious snags, including objections from the industry, a growing turf war between current regulators worried about losing power, and the slow pace of Congressional leaders who have been too busy rebuilding our health care system and confronting climate change to get much done on the financial services front.

But House Financial Services Chairman Barney Frank (D-MA) and Senate Banking Committee Chairman Chris Dodd (D-CT) continue to insist that it is their goal to complete the overhaul by the end of the year – the same timeframe being pushed by the White House. The Treasury Department sent lawmakers an 18-page handout before the August recess that presses the Department’s case for an overhaul.

A great 10,000-foot view from Slate: “Sure, banks aren't happy about Obama giving regulatory power to the Federal Reserve, nor is the idea to create a Financial Services Oversight Council especially popular. But overall, Wall Street has been pleased with the president's proposed reforms. And it's only getting happier: The longer Congress takes debating health care and energy bills, the more the economy recovers, the more watered-down the regulatory legislation will likely be once it reaches the president's desk.”

APPROPRIATIONS

To date, the House has passed all twelve appropriations bills. Before recess, the Senate completed work on both the Agriculture Appropriations and Energy and Water Appropriations bills. In addition to appropriations for Homeland Security and the Legislative branch, that leaves the total of completed bills in the Senate at four.

This leaves the remainder of this month for the Senate to finish action on eight bills, and for both bodies to complete conferences before the fiscal year ends on September 30th. If that does not happen, Congress will have to pass a Continuing Resolution to extend government funding for a short time until the rest of the bills are complete.

KUDOS TO CLIENTS

Congratulations to the City of Mukilteo! Money Magazine named Mukilteo as one of the top ten small towns in America for 2009. Mukilteo was recognized for its “drop-dead gorgeous” views, low unemployment, diverse economy and great schools.

Kudos also to the City of Auburn for securing stimulus funds for public safety! Auburn secured more than $1.2 million from the Community Oriented Policing (COPS) program. Funding will allow Auburn to maintain and possibly increase the number of police officers, and to support the excellent community programs run through the department.

TONY’S TAKE – Can the Dems’ 2009 Legislative Agenda Be Saved?

Make no mistake about it, the raucous congressional town hall meetings held last month around the country were politically significant. All across America, thousands of people showed up at town meetings to argue with their elected representatives – and with each other – about President Obama’s health care plan and the role of the federal government.

Some were there because they were encouraged to attend by third party groups on the right and left, but I believe the vast majority of people who attended were regular citizens concerned about the country. For proof, just look at Congressman Rick Larsen’s town meeting in Everett where 3,000 people showed up for a town meeting held at the local baseball stadium. In Colville (population, 4,988 people as of 2000 census), Congresswoman Cathy McMorris-Rodgers had over 750 people in attendance for her town meeting. During my 15 years of congressional service, I sat through dozens and dozens of town meetings, and the most people I can ever remember attending is 100+; not anything approaching the numbers seen in August.

As incredible as the August town meetings were, the four most important “town meetings” will take place this week in Washington, D.C. when the Senate Democrats and the Senate Republicans have their weekly caucus luncheons, and the House Democrats and House Republicans have their weekly caucus meetings. Oh how I would love to be a fly on the wall at those meetings as senators and representatives share their “what I did this summer” stories with their colleagues, and debate the congressional “to do list” for this fall.

President Obama will then either add more fuel to the fire, or give Members something new to think about, (probably both) when he addresses a joint session of Congress on Wednesday.

The more important question, however, is not whether the President can get his health care bill back on track; it’s whether the Democrats can save their entire 2009 and 2010 legislative agenda. For the Democrats, August 2009 will go down as one of the worst political months for the party. This now has operatives worried about key elections in November 2009 (races for Governor in New Jersey and Virginia, and even the King County Executive here in Washington state), and congressional elections set for November 2010.

Congressional Democrats are also faced with the reality of trying to keep alive an aggressive agenda that has lots of pieces that are difficult to achieve on their own, let alone as part of a package that is
too much for the American people to swallow. As we’ve touched on in this Update, over the next several months the Democrats hope to revive the health care reform bill, pass the climate change bill, finish this year’s appropriations bills, consider a second economic stimulus bill, and then move on to issues such as regulatory reform, immigration reform, infrastructure improvements and a possible tax package in 2010.

While they try and complete those items, they will also have to give daily attention to the Big Three distractions:

• The economy and job growth – The recession seems to be over, but unemployment keeps rising and is expected to remain high throughout next year, which is not good for Democrats running for re-election in tough districts.
• The deficit and national debt – The Administration is now forecasting that the national deficit will be over $1.6 trillion next year. Just 18 months ago, the nation’s capital was hyperventilating over an annual budget deficit of $350 to $400 million. The Administration’s fiscal policies are simply unsustainable, and federal spending will have to be reined in at some point, which will further complicate the legislative agenda because of federal spending constraints.
• Iraq, Afghanistan and national security – Health care and the economy have taken national security off the front pages, but these issues are just lurking under the surface, and there is a lot to be concerned about around the world if you’re the President of the United States. As the economy improves, you can expect national security issues to draw more attention and that will further crowd an already crowded agenda.

There is still time for the Democrats to re-capture the political momentum for their legislative agenda, but I think they need to trim it back extensively in order to be successful. They must put health care reform on a much longer walk for completion, and they have to reduce the overall size of what is being proposed by a significant amount if they want to pass something into law.

I think they must put cap-and-trade legislation on an even longer walk to completion because political support for what passed the House in June has evaporated. The current political situation probably means that cap-and-trade legislation is on the backburner for the next 18 months, but never completely extinguished because that also brings significant political risk.

Giving themselves more time on those two issues would give Congress and the White House the space they need to re-direct and re-focus their agenda on a small list of priorities such as job growth, improving our nation’s infrastructure system, and bringing our nation’s fiscal house in order. Those three, while not as politically sexy as health care reform and cap-and-trade, are still plenty meaty and plenty difficult to accomplish, but also much less divisive. Tie those three together with a strong national security agenda (which is not an easy chore at all), and the Democrats can probably regain some of their lost political momentum.

One of the most difficult things for politicians to do is admit their mistakes. Because of that, it is going to be hard for the White House and their supporters in Congress to completely put their arms around a trimmed down, focused agenda. However, that is what they must do in order to regain their political momentum. If they don’t, the voters will most certainly make the majority party pay next November.

END

 

W2A Update
January 19, 2009

Welcome to 2009, the 111th Congress, and the inauguration of the 44th President of the United States!

The New Year brings much anticipation, hope, stress, and all sorts of agendas, ideas, thoughts and potential. As Congress is underway, and on the eve of one of the most highly anticipated presidential inaugurations in our country’s history, we wanted to give you a quick update on what is going on in Washington, DC.

DC Legislative Update

Stimulus, stimulus, stimulus.

Of course there are a number of other items taking up time on Capitol Hill such as nomination hearings, prep for the much anticipated inauguration and new administration, a lot of committees and committee chairmen setting up their agendas for the 111th Congress, the Senate passed the Omnibus Public Land Management Act and the House passed an expansion of the State Children's Health Insurance Program.

But as most Americans are aware, the stimulus is the priority discussion taking up time on Capitol Hill, K Street and Main Street. Democratic staff and leaders in both the House Appropriations and Ways and Means Committees put an $825 billion draft stimulus plan to paper, and together with Speaker Nancy Pelosi announced that mark-ups will occur this week.

In the Senate, the Finance Committee is also preparing to take up the stimulus. Talks are on-going between Capitol Hill and President-elect Obama’s economic advisors, and details almost seem to change daily. On this one we say “stay tuned” – there is still a ways to go.

Congressional Committees and Leadership

The final committee assignment lists for both in the House and Senate are still being generated, but for members representing the Pacific Northwest we wanted to highlight a few new committee assignments for veteran members, and a couple key assignments for new members (in alphabetical order):

Senator Mark Begich (D-AK) – Senate Armed Services; Senate Commerce Committee
Rep. Doc Hastings (R-WA) – Ranking Member, House Natural Resources Committee
Senator Jeff Merkley (D-OR) – Senate Environment and Public Works; Senate HELP Committee
Rep. Walt Minnick (D-ID) – House Financial Services
Senator Lisa Murkowski (R-AK) – Ranking Member, Senate Natural Resources Committee

Rep. Dave Reichert (R-WA) – House Ways and Means Committee
Rep. Kurt Schrader (D-OR) – House Agriculture Committee, House Small Business Committee
Senator John Tester (D-MT) – Senate Appropriations Committee

Obama Administration

The following Senate committees have held nomination hearings thus far and confirmation for many of those listed is expected shortly after President-elect Obama is inaugurated. This is an active list as the committees are still vetting candidates, and many nomination hearings will be on the calendar for weeks to come. This is just a sample:

Agriculture
Gov. Tom Vilsack (D-IA) to be Secretary of Agriculture

Banking, Housing, and Urban Affairs
Shaun Donovan to be Secretary of Housing and Urban Development
Mary Schapiro to head the Securities and Exchange Commission

Budget and Homeland Security
Peter R. Orszag to be Director of the Office of Management and Budget
Robert L. Nabors to be Deputy Director

Energy and Natural Resources Committee
Steven Chu to be Secretary of Energy
Sen. Ken Salazar (D-CO) to be Secretary of Interior

Environment and Public Works Committee
Lisa Jackson to be Administrator of the Environmental Protection Agency
Nancy Sutley to be Chairman of the Council on Environmental Quality

Foreign Relations
Sen. Hillary Clinton (D-NY) to be Secretary of State
Susan Rice to be U.S. Ambassador

Health, Education, Labor and Pensions
Former Sen. Tom Daschle (D-SD) to be Secretary of Health and Human Services
Rep. Hilda Solis (D-CA) to be Secretary of Labor
Arne Duncan, to be Secretary of Education

Homeland Security
Gov. Janet A. Napolitano (D-AZ) to be Secretary of Homeland Security

Judiciary
Eric H. Holder Jr. to be Attorney General (continued)

Veterans Affairs
General Eric Shinseki to be Secretary of Veterans Affairs

Obama White House Staff

We’ve provided this list before, but once again, President-elect Obama has selected the following staffers to join him in the White House:

Chief of Staff: Rahm Emanuel
Deputy Chief of Staff: Jim Messina
Deputy Chief of Staff: Mona Sutphen
Press Secretary: Robert Gibbs
White House Counsel: Gregory Craig
Assistant to the President for Energy and Climate Change: Carol Browner
Senior Adviser to the President: David Axelrod
Senior White House Adviser: Valerie Jarrett
Senior White House Advisor: Pete Rouse
Director of Communications: Ellen Moran
Deputy Director of Communications: Dan Pfeiffer
White House Lobbyist: Phil Schiliro

Kudos to Clients

Last week, Sound Transit was awarded $813 million by the Federal Transit Administration and the outgoing-Bush Administration. This significant achievement is the result of years of work and effort by the Sound Transit team, and we’re thrilled to have contributed to it. Congratulations Sound Transit!

Tony’s Take – Welcome to the White House

A wave of optimism is hitting America as President-elect Barack Obama prepares to take over the reins of our federal government tomorrow. Public polling over the last few days shows that solid majorities of Americans give the new President favorable ratings, and they are optimistic that he will solve our economic woes. At the same time, the public seems realistic that our economic challenges won’t be solved overnight, and they are prepared to be patient while our new President attempts to get us back on track.

This observer is happy to see all this optimism, but wonders how long it will last. Over the next few days, everything and anything will seem possible as President Obama takes office. This will be like no other Presidential Inauguration in our country’s history – the media coverage will be over the top, there will be more A+ entertainers in our nation’s capital mugging for the cameras than the Oscars and Grammy’s combined, and millions of people will be on the National Mall to witness history.

With this as the beginning, will it be possible for our new President to maintain the momentum?

Given the state of our economy and the overwhelming congressional majorities for the Democrats, I think that President Obama will be able to rack up several impressive victories in the opening few weeks of his presidency. His Cabinet will be fully installed ASAP through speedy confirmation votes, last year’s unfinished business will be done quickly, and the economic stimulus bill will be passed with huge majorities and much fanfare sometime in early February.

And then it will start to get hard because Congress will turn its attention to the annual spending bills and the issues that divide our nation (national energy policy, immigration reform, restructuring of the financial markets, etc), and those debates will be more “politics as usual” than “yes, we can” for one simple reason – our national deficit could easily top $1 trillion this year, and that will make it difficult for Congress to manage costly issues beyond the economic stimulus bill.

So, what can President Obama do to keep the momentum going? If he asked me (and I’m sure he’s got me on speed dial), I would suggest that President Obama keep his eye on these five things in the opening six months of his Presidency:

• Don’t Overreach: Some Obama supporters desperately want to translate the new President’s election victory into a mandate for a set of liberal issues and policies that could be implemented this coming year. I saw the November 2008 election as a mandate for Obama the man, not Obama the advancer of liberal causes. It always frustrated me that President Bush and his top staff tried to turn the relatively close 2004 election victory into some kind of mandate for a litany of conservative policy changes – let’s hope that President Obama has an aggressive centrist issue agenda, not one designed to please liberal ideologues.

• Forget Bush as soon as possible: Over the last couple of weeks, President-elect Obama has softened his language when it comes to the outgoing President. Some of his most ardent supporters find this troubling, but to me, it’s a sign that the new President is ready to lead, and not just offer criticism about the previous occupant. I want to hear what President Obama wants to do, not his criticism of the previous occupant.

• Neglect foreign affairs at your own peril: Every new President is more comfortable dealing with domestic issues in their first term, yet our last two Presidents faced serious foreign affairs crises within months of being sworn into office. For President Bush, it was September 11. For President Clinton, it was Somalia, which proved to be a major policy nightmare for the new President, his Administration and the strong Democratic majorities in Congress. President Obama inherits a more dangerous world than what greeted both Presidents Clinton and Bush, and he will need to be prepared for some kind of international crisis early on that will take him and his team off their “fix the economy” message and game plan.

• Good luck with Nancy and Harry: In my mind, the two biggest challenges to President Obama during his first year in office are House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Both have a proclivity to create political messes on their own, both need to learn how to manage Congress with a President of the same party (which will be a much harder challenge for them than people realize), and both have large majorities that create expectations for easy wins that will probably be very hard to meet. The good news for President Obama is that his favorable rating is at 73 percent, and Congress is at 21 percent, so I suspect that the Speaker and Majority Leader will do more listening than usual over the next several months.

• Keep up the optimism and hope as long as possible because we need it: America is ready for something to cheer for, and our new President has a great opportunity to tap into that sentiment because his language has always been so hopeful and civil. The longer he can maintain that optimism and civility, the easier it will be to manage the challenges that come his way.

The next several months are going to be very important ones for our new President and our country. My hope is that he is hugely successful and that 2009 is a productive and happy year for all of us.