Congress has been in and out of session over the last month. The only constant here in DC it seems has been snow and cold weather. There has been little accomplished in Congress since the earlier funding of the federal government for this fiscal year passed followed by the passing of legislation to increase the debt ceiling until March 2015.
These usually confrontational economic measures are out of the way until this fall, and probably beyond the election, ending possible disruption of government.
The President did submit a budget in early March, albeit a month after statutorily required, but little attention has been paid to it. It is doubtful a new budget outline will be considered this year.
Natural gas exports
There are a couple of issues that are receiving considerable attention. The first is the export of liquefied natural gas (LNG). The Department of Energy has been gradually reviewing and approving licenses to allow the export of gas but the political and diplomatic situation involving Russia and Ukraine has energized some lawmakers to urge a fast-track of exports from U.S. gas supplies to other countries dependent on energy from Russia.
The Department of Energy in the last few days gave the go ahead to a seventh project that would send gas to countries that do not have a free-trade agreement with the United States -- bringing allowable exports to 9.3 billion cubic feet per day. Of course, there are still other hurdles-like retrofitting facilities and other legal challenges, to face before significant gas starts flowing abroad.
The gas export debate will be around for a while as both Senate and House deliberation will feature pleas from abroad for the gas, warnings from domestic manufacturers worried about supply and price and competing reports from “experts” about what would happen to domestic energy prices, jobs and emissions.
So far the Administration has stuck to its policy of continuing its case-by-case review of LNG export projects. However, pressure to speed up is increasing.
The second major issue is tax reform being championed by Ways and Means Chairman Dave Camp (MI-R). While major tax reform is unlikely to be seriously considered this year, Mr. Camp is proceeding ahead using his proposal released last month of eliminating deductions and credits while reducing marginal rates as the foundation. However, there is only lukewarm support by the House leadership to tackle such a large issue – especially in an election year. There is little support of tax reform in the Senate by either party. In addition, an inactive Administration makes this an issue for the next Congress.
The matters bears watching for the future as Mr. Camp intends to:
Hold additional bipartisan meetings with the staff of JCT on the draft;
Hold public hearings on specific portions of the bill; and
Begin advancing permanent legislation through the Committee that paves the way for tax reform by making incremental progress towards full reform.
The other tax issue outside but related to tax reform on the horizon deals with 50 or so provisions that expired at the end of last year, the so-called “extenders”. New Senate Finance Committee Chairman Ron Wyden (D-OR) has made dealing the expiring provisions a priority and Mr. Camp as also has stated his Committee will continue its work of going policy by policy to determine which extenders should be made permanent in a series of hearings and mark-ups on dates not yet announced.
There is a sense that gridlock is on the wane. However, what Washington has entered is a state of “non-lock”. There are not enough big substantive issues that either side will consider to lock the process. The House and Senate operate almost without recognizing the other body.
The real state of affairs is the November election. For Republicans, it is all about the election even more so than for the Democrats. Votes, positions, policy, investigations, action and inaction are all designed to put the opposition into difficult positions. However, Republicans know that unless they can control Congress, they will continue to be nothing more than an obstructive nuisance. Mr. Obama knows that without the backstop of the Democrat Senate, the last two years of his term will be quite different.