lookingforward tall

February 2013

Looking Forward—Retrospectively

With a newly minted Congress entering the halls of Capitol Hill, the 113th Congress’ legislative agenda is taking shape. The priorities differ from the 112th Congress, but many of the same obstacles are reappearing. To boot, the aura of the new congressmen and congresswomen will be almost identical to the previous year’s.

Eighty fresh faces now call themselves congressmen. The balance of power did not change following the November elections, although Democrats gained seats in both chambers. The Senate remains in the hands of the Democrats, 55 to 45, including two Independents who will caucus with the majority party. The House will continue to maintain the status quo under the control of Republicans. They will hold 234 seats while Democrats will have 201, the latter gaining eight seats. This small gain for the Democrats has created political turbulence in terms of Republican platform messaging. Some analysts believe the relatively small losses for the Republican Party is indicative of an unprecedented internal divisiveness between Tea Party support and the broader conservative base.

At the turn of the New Year, efforts to thwart the catastrophic results of plunging over the “fiscal cliff” were the center of political discourse. The terms of the Budget Control Act of 2011 were set to go into effect on Dec. 31, 2012. This spelled doom for the nation, according to many speculators, media sensationalists and politicos alike. The “fiscal cliff” would mean across the board automatic cuts to spending and the expiration of existing tax cuts all in order to reduce the deficit—amounting to an additional $600 billion in the federal treasure chest. The automatic spending cuts were agreed upon when the debt ceiling arrangements were made in August 2011. The tax hikes would include: the end of the Bush-era tax cuts, last year’s temporary payroll tax cuts, the end of tax breaks for businesses, shifts in the Alternative Minimum Tax that would take a larger bite out of higher income earners, and the beginning of taxes related to President Obama’s healthcare law. Unless the Obama Administration and a split Congress came to an accord on a deficit reduction deal, the doom that was forecasted would drop America back into a recession, send unemployment back to 2009 levels, and risk a credit rating cut.

After tense discussions, the House approved the Senate’s deal on Jan. 1, narrowly averting the onset of the fiscal cliff. The roughly $64 billion package raises approximately $600 billion in new revenues over 10 years. It extends Bush-era tax cuts for the majority of Americans as well as long-term unemployment benefits that were set to expire.

But the Washington melodrama that played out into the eleventh hour will continue to be acted out in the 113th Congress. With the Democrats looking to safeguard entitlement and other social programs, they will fight for lower spending cuts and higher tax rates for the wealthiest Americans. Republicans will continue to seek higher reductions to entitlement programs, sustain robust coffers for defense spending and stave off tax cuts to the highest income earners. They will continue to put up a fight to prove they have the bite to back their bark.

This will visibly play out in the fight for negotiations over the debt ceiling. The debt has quickly peaked to the current height of $16.4 trillion. Republicans will use these negotiations as a weapon to receive concessions from the opposing side. They will be looking for significant financial reforms if they are to compromise on raising the debt ceiling again. They also warned in December about impeding progress if negotiations for averting the “fiscal cliff” did not pan out their way, especially with regards to raising taxes on the wealthy. This looks eerily similar to the circumstances surrounding the last time the national debt approached its ceiling. All of this has the potential to fuel fears of what happens in the worst-case scenario. Similar to the notion of edging off the “fiscal cliff,” playing on the anxiety of the American people will be at a recurring political tactic in the 113th Congress as it was in the 112th.

With the focus on deficit and debt reduction in late 2012, Congress did not move any fiscal 2013 spending bills by the end of the year, a decision guaranteeing the federal government would operate under a continuing resolution for half, if not all, of 2013. Both the House and the Senate made great strides in closing the gaps on several bills, but the likelihood of passing a large omnibus faded. Initial reports indicate Congress will likely pass another continuing resolution before the current stopgap expires on March 27th to cover the remainder of fiscal 2013. In two out of the past three election years, the majority of annual spending bills were never completed, and scores of federal agencies were left operating at the prior year’s funding levels for the entire budget year. Congress had one of the worst years on record in 2012 without one appropriations bill becoming law.

One other non-fiscal area that may rear its head in the 113th Congress is immigration. With President Obama’s Deferred Action for Childhood Arrivals (DACA) executive order being issued in the summer of 2012 and the large role that Hispanics played in shaping the 2013 election outcomes, the subject of immigration is one that is sure to become popular. A more comprehensive immigration reform bill will most likely be introduced and debated heavily in both chambers, and Republicans will most certainly heed the growing need to concentrate on the Hispanic demographic with its accelerating electoral clout. Democrats will also try to continue to keep the momentum going with the demographic as well. In the 2012 general elections, President Obama and Democrat contestants drew the Hispanic vote overwhelmingly.

With the balance of power in Congress staying the same as in 2012, many political issues and the ensuing divisiveness will remain similar, but the battles may become even fiercer as Republicans try to regain the upper hand and reforge a cohesive party foundation. Fiscal matters will remain the hot-button issues as America tries to dig itself out of debt and reduce its deficit in order to avoid our European allies’ current deteriorating economic situation. Non-fiscal issues will likely take their cue from the concessions and collaborations made in the early months of 2013. The ability to work together in a bipartisan manner on the debt limit and fiscal cliff negotiations will likely carry over to discussions that transcend political ideology. Eighty new faces means a new dawn for Congress, but old traditions die hard on the Hill. 2013 will not be any different.

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