The Washington Report.
December 14, 2006
In the early morning hours of December 9, the 109th Congress came to an end after a flurry of last-minute activity that included passage of two Council priorities. Congress seamlessly extended and strengthened the R&D Tax Credit so that more companies will be able to benefit from the Credit in future years. In addition, Congress approved provisions that will prevent a five percent cut in Medicare physician payments that was scheduled to take place in 2007.
The first session of the 110th Congress, with both chambers now under Democratic control after the November elections, will convene on Thursday, January 4, 2007.
Tax Extenders
On December 9, members of Congress finished up their work for the year by passing a tax extenders, trade and healthcare legislative package. The Senate passed the entire package (H.R. 6111) by a vote of 79-9. The House, which had split the package in two parts, passed the tax extenders portion by a vote of 367-45. Included among the tax extenders (which are all extended through the end of 2007) was a seamless extension and strengthening of the R&D tax credit, one of the Council’s top legislative priorities this year. Congress had allowed the credit to expire at the end of 2005. The extension of the credit, however, is retroactive to January 1, 2006 and beginning on January 1, 2007 is strengthened by increasing the value of the alternative incremental credit and by adding a new alternative simplified credit, which will have the effect of allowing more companies to benefit from the credit in future years.
The Council has been a long-time supporter of the credit. Research and development plays a significant role in strengthening the nation’s innovation sector, a major force behind sustained economic growth. It is particularly important to New England, where investments in research and development fuel the region’s innovation and technology sectors, which feature world-renowned universities, hospitals, laboratories, and technology companies.
Also included in the tax extenders package were provisions that extend the state and local sales tax deduction, the above-the-line deduction for higher education expenses, the Work Opportunity Tax Credit, the Welfare-to-Work Tax Credit, and Brownfields expensing, among other provisions.
Health
Several health-related provisions were included in the legislation passed at the very end of the 109th Congress. One provision, in particular, addressed a Council agenda item as Congress included language that prevents the scheduled five percent cut in physician payments for 2007 while providing a 1.5 percent bonus incentive payment to physicians who report quality measures in the coming year. The impact of the cuts would have been far broader than on doctors alone. New England’s entire healthcare industry would have been adversely affected by the cuts – and healthcare plays an absolutely vital role in our region’s economy, not to mention our quality of life.
Other provisions will require CMS to develop quality measures for hospital outpatient and ambulatory surgery services while providing a full payment update to these facilities if they choose to provide designated quality data starting no sooner than 2009. In addition, the Medicare Advantage stabilization fund will be partially reduced to help offset some of the health-related provisions of the legislation, and there are provisions designed to improve health savings accounts (HSAs).
Also passed at the end of the session was legislation to reauthorize the National Institutes of Health (NIH). The reauthorization is the first for the NIH in 13 years. The NIH bill was allowed to pass after a deal was worked out with House Energy and Commerce Committee Chairman Joe Barton (R-TX) that allowed $20 million of Texas’ excess State Children’s Health Insurance Program (SCHIP) funding, along with other states’ excess funding, to be transferred to several states, including Rhode Island and Massachusetts, that are facing SCHIP funding shortages. Under the legislation that passed, Rhode Island will now receive about $18.8 million to help alleviate its shortfall, rather than the $7.1 million it was originally slated to receive, and Massachusetts will receive $55.9 million, rather than $20.7 million.
In addition, Congress passed anti-bioterrorism legislation that calls for $1 billion in grants to biotechnology firms developing vaccines to combat bioterrorism-related illnesses and diseases. However, also passed are new requirements for the government to set benchmarks for states and localities receiving federal grant money to prepare for health emergencies, as well as a requirement that states begin matching federal funds in 2009.
Energy & Environment
On December 6, the House approved by voice vote the Pipeline Safety Improvement Act, which was later passed by the Senate by unanimous consent. The legislation that passed was the same that the House Energy and Commerce and Senate Commerce committees approved earlier this session. The bill regulates low-stress pipelines that carry hazardous material at the same level as high-stress lines that carry a greater volume of these same substances. The bill also authorizes $350 million over four years and requires states with pipeline safety programs to establish an excavation damage prevention program.
On December 8, Congress approved H.R. 5682, the United States-India Peaceful Atomic Energy Cooperation Act. The House voted 330 to 59 in favor of the bill, and the Senate passed the bill 85-12. The bill will aid India in developing its nuclear energy infrastructure and supporters of the bill hope it will help to solidify India as an ally to the U.S. while allowing India to become more of a counterbalance to China in Asia. Due to India’s long relationship with Iran, the bill also includes a provision that would require all future administrations to evaluate if New Delhi is cooperating with U.S. efforts to confront Iran about its nuclear ambitions.
On December 9, The House reauthorized through 2013 the Magnuson-Stevens Fishery Conservation and Management Act, which the Senate had approved earlier in the 109th Congress. The bill, which now will be sent to the President for his signature, strengthens protections against overfishing off the U.S. coastline by requiring overfishing to be resolved within two years after it is discovered, starting in 2009. The legislation also includes a provision that requires annual catch limits to be set at or below those recommended by any of the eight regional fishery management councils’ scientific advisers as suggested by the U.S. Commission on Ocean Policy. Another provision in the bill authorizes and limits the trading of fishing quota shares for a particular stock of fish.
Also on December 9, several energy-related provisions were included in the tax extenders package. Extended through the end of 2008 are the renewable electricity production tax credit, the tax credit for the purchase of residential solar energy equipment, and a tax credit for the purchase of fuel cell power plants. Other energy provisions were also part of the package including those that provide for energy exploration, development, and production activities in the outer continental shelf of the Gulf of Mexico.
Budget and Appropriations
Shortly before midnight on December 8, when a previous continuing resolution passed on November 15 to fund most of the federal government would have expired, the Senate joined the House in passing another continuing resolution which runs through February 15, 2007. This CR will allow the operation of 13 federal departments and various other programs whose appropriations bills have not yet passed to continue operations until then.
On December 11, Congressional Democratic leaders announced that once the current continuing resolution expires on February 15, another CR will be passed that runs through the end of the fiscal year on September 30. In addition, they announced that there will be no earmarks whatsoever attached to any of the FY 2007 spending. By doing away with the earmarks, there will be some ability to add some extra funding, perhaps in areas such as health research, education, and grants to local law enforcement agencies, while still keeping overall funding from rising above FY06 levels, which is mandated by the CR.
Trade
On December 8, the House approved the trade portion of the session-ending legislative package by a vote of 212-184. The Senate approved the combined tax and trade package early the next morning by a vote of 79-9. The trade portion of the trade legislation contains provisions that grant Vietnam with permanent normal trade relations (PNTR), allow 133 developing nations to continue for another two years to export duty-free specified goods to the U.S., extend for six months trade preferences for Colombia, Peru, Bolivia and Ecuador, allow sub-Saharan African countries to use third-country fabrics in duty-free apparel exports to the U.S., and allow Haiti to do the same. The provisions regarding Haiti were opposed by lawmakers from several southern textile-producing states, but ultimately there was not enough opposition to derail the package.
New Members of Congress and New England Committee Chairmen
On November 7, five new members of the House of Representatives and two new members of the U.S. Senate were elected from New England. One of the new Senators is former Vermont Representative Bernard Sanders (I-VT). He defeated businessman Richard Tarrant to fill the seat of retiring Senator James Jeffords (I-VT). He has been assigned to the Senate Environment and Public Works, Budget, HELP, and Aging Committees.
The other new Senator elected in New England is Sheldon Whitehouse (D-RI). Whitehouse defeated incumbent Senator Lincoln Chafee (R-RI). The Sen.-elect is a former United States Attorney for Rhode Island as well as a former Rhode Island Attorney General. He is a graduate of Yale University and earned his law degree at the University of Virginia. He has been assigned to the Senate Budget, Environment and Public Works, Judiciary, Intelligence, and Aging Committees.
Rep.-elect Carol Shea-Porter (D-NH) defeated Rep. Jeb Bradley (R-NH) to win the first Congressional district seat in New Hampshire. A political activist who had never before run for office, Shea-Porter was the City Chair of the Rochester Democrats and previously had worked on Gen. Wesley Clark’s presidential primary campaign in 2004. She has both a bachelor’s and master’s degree from the University of New Hampshire, and is the first woman ever elected to Congress from New Hampshire. She will have a seat on the House Education and Workforce Committee.
Rep.-elect Paul Hodes (D-NH) defeated six-term incumbent Rep. Charles Bass (R-NH) to win New Hampshire’s second district congressional seat. The race was a rematch after Hodes lost by 20 percentage points to Bass in 2004. Hodes is a former prosecutor and long-time lawyer based in Concord who also is a musician who performs with his wife in the musical group, Peggosus. He was the first Chairman of the Board for the Capitol Center for the Arts, serves on the New Hampshire State Council on the Arts, and is a member of the New England Creative Economy Council. He is a graduate of Dartmouth College and Boston College Law School. He will serve on the House Government Reform Committee.
Rep.-elect Peter Welch (D-VT) is a seasoned public servant who served in the Vermont Senate from 1981-1989 and then again from 2002-present, much of the time as either minority leader or president pro-tempore. He also ran for Congress once before in 1988 and was the Democratic nominee for governor in 1990. Welch defeated former Vermont National Guard Adjutant General Martha Rainville for Vermont’s at-large congressional seat previously held by Bernard Sanders. Rep.-elect Welch is a lawyer who graduated from Holy Cross College and the Boalt Hall School of Law.
Rep.-elect Chris Murphy (D-CT) will be one of the youngest members of Congress at age 33. Yet he is already a seasoned politician, having served for four years each in the Connecticut State House of Representatives and in the Connecticut State Senate. He defeated 12-term incumbent Rep. Nancy Johnson (R-CT). An attorney, Murphy is a graduate of Williams College and the University of Connecticut Law School. He will serve on the House Government Reform Committee.
Rep.-elect Joe Courtney (D-CT) defeated Rep. Rob Simmons (R-CT) in the closest race in the entire country, winning by less than 100 votes. Courtney previously served in the Connecticut General Assembly from 1987-1994. During his tenure he served as Chair of both the House Public Health and Human Services Committees. He previously ran for Lieutenant Governor in 1998 and first challenged Simmons for his seat in 2002. An attorney, Courtney is a graduate of Tufts University and the University of Connecticut School of Law. He will have a seat on the House Armed Services Committee.
A result of the Democrats assuming control of both Houses of Congress is that several members of Congress from New England will take over the chairmanships of Congressional committees. In the Senate, Sen. Edward Kennedy (D-MA) is the new Chairman of the Health, Education, Labor and Pensions (HELP) Committee. Sen. Patrick Leahy (D-VT) is the new Judiciary Committee Chairman. Sen. Chris Dodd (D-CT) will now take over the Banking Committee. Sen. Joseph Lieberman (D-CT) is the new Chairman of the Homeland Security and Governmental Affairs Committee and Sen. John Kerry (D-MA) takes over the Small Business Committee gavel. In the House, Rep. Barney Frank (D-MA) will now chair the Financial Services Committee
Congressional Schedule
The 110th Congress will convene on January 4, 2007. The House has set a tentative adjournment date of October 26. The Senate has not yet set an adjournment date. The first recess for both the House and Senate is scheduled for the week of Feb. 19-23 for President’s Day. The House will then take a two-week Easter recess the weeks of April 2 and April 9. The Senate is scheduled to take only a one week Easter break the week of April 2. Both the House and Senate have scheduled one week recesses for Memorial Day (the week of May 28) and Independence Day (July 2). The August Recess for both chambers is scheduled to begin on August 6, with members set to resume work in Washington on September 4.
Administration
On December 6, the Senate confirmed Robert M. Gates as the 22nd U.S. Secretary of Defense by a vote of 95-2. Secretary Gates is a former CIA chief and Russia expert who served in various capacities under four previous presidents. After Gates testified before the Senate Armed Services Committee, he was described as displaying “independence” and “candor” by committee members. The nominee was approved by the committee by a vote of 24-0. As Secretary of Defense, Robert Gates will confront not only the issue of Iraq, but also budget trade-offs and readiness problems in the Army and Marine Corps.
On December 7, the Senate confirmed Andrew von Eschenbach to be the Commissioner of the Food and Drug Administration (FDA) by a vote of 80-11. Commissioner Eschenbach had been acting commissioner since the September 2005 resignation of former Commissioner Lester Crawford. He also previously served as Director of the National Cancer Institute.
Postal Reform
On December 9, after years of negotiations, Congress approved postal reform legislation that establishes a new rate cap that will not allow the United States Postal Service (USPS) to raise rates by more than the rate of inflation over the next ten years. The legislation also contains a provision that relieves the USPS from paying retirement benefits earned by employees while on active duty in the military. Those costs will now be paid by the U.S. Treasury.
Privacy
In December 8, the Senate passed by voice vote the Telephone Records and Privacy Protection Act, H.R. 4709, which would criminalize the practice of lying to obtain telephone records of private citizens. The House passed the bill in April, and it is now on its way to the President’s desk. The legislation prohibits obtaining confidential phone records by “making false or fraudulent statements” to a phone company employee, by “obtaining false or fraudulent documents to access accounts”, or by “accessing customer accounts through the Internet” without permission.
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