- On Monday, October 31, the House will meet at 1:00 pm in pro forma session. On Tuesday, the House will meet at 12:00 pm for morning hour and 2:00 p.m. to consider the following legislation on suspension of the rules: H.R. 1002, the Wireless Tax Fairness Act of 2011; H.Con.Res. 13, a resolution reaffirming “In God We Trust” as the official motto of the United States; and S. 1280, the Kate Puzey Peace Corps Volunteer Protection Act of 2011. The Senate returns from a week-long recess and will convene at 3:00 p.m. on Monday for a period of morning business before considering the nomination of Stephen A. Higginson to be United States Circuit Judge for the Fifth Circuit. Thereafter, the Senate will resume consideration of H.R. 2112, the legislative vehicle for the (1) Agriculture; (2) Commerce; Justice, and Science; and (3) Transportation/HUD appropriations bills. This minibus appropriations bill is expected to pass the Senate on Tuesday, November 1, 2011.
- Status of FY2012 Appropriations. The Senate is poised to pass its first FY2012 Appropriations Minibus (H.R. 2112 / S. Amt. 738) on November 1 after voting on the few remaining amendments. The measure includes the Agriculture, Commerce-Justice-Science, and Transportation-Housing and Urban Development FY2012 spending bills.
Appropriators conceded they will not complete their FY2012 appropriations work prior to the expiration of the current Continuing Resolution (CR) (P.L. 112-36) on November 18; therefore, an additional CR, possibly running through late December 2011, will be added to the bill either before it is approved by the Senate or when it reaches the House. As the House has already passed the Agriculture bill (the primary vehicle for the minibus), the measure will go directly to a House / Senate conference and will not be subject to additional floor amendments in the House. However, House Appropriations Chairman Harold Rogers (R-KY) is considering adding one or two additional appropriations bills to the minibus to expedite resolution of the FY2012 process (potential bills for inclusion were not identified).
The next minibus is expected to be introduced in the Senate on November 2 and will reportedly include the Energy and Water, Financial Services, and State-Foreign Operations bill.
- Vote on Tap for Third Democratic Jobs Proposal. Senate Majority Leader Harry Reid (D-NV), Senator Amy Klobuchar (D-MN) and Department of Transportation Secretary Ray LaHood introduced the Rebuild America Jobs Act on October 21. This is the second bill to pull components of the President’s larger jobs package into a stand-alone measure. This bill provides $50 billion for transportation investment - $27 billion for highway and rail projects; $5 billion for TIGER grants and TIFIA funding; $9 billion for transit programs; $2 billion for airport development; $1 billion for the Federal Aviation Administration’s NextGen air traffic control system upgrade; $4 billion for passenger-rail upgrades, including some high speed rail projects; and $2 billion for Amtrak equipment and infrastructure. The bill also creates a $10 billion National Infrastructure Bank. The bill is offset with a 0.7 percent surtax on household income over $1 million. Majority Leader Reid intends to hold a vote on the measure this week. As with the two prior jobs proposals, this bill is also unlikely to secure the 60 votes needed to move forward.
Majority Leader Reid intends to introduce two additional jobs-related measures focused on components of the President’s proposal in the coming weeks.
- Hearing on Government-Run Student Lending. On Tuesday, October 25, the House Education and the Workforce Subcommittee on Higher Education and Workforce Training held an oversight hearing to examine the Department of Education’s implementation of the Direct Loan program. During the hearing, Representative John Kline (R-MN), Chairman of the House Committee on Education and the Workforce, and other committee members expressed concerns about the Department’s ability to resolve issues of poor customer service, insufficient student data, debt counseling and default prevention, and the recent security breach of the Direct Loan website.
In 2010, Congress passed the Health Care and Education Reconciliation Act, which replaced the Federal Family Education Loan (FFEL) program with the Direct Lending program (DL). Under DL, the federal government lends education loans directly to students using federal funds, as opposed to the former FFEL program, which used private sector capital to finance education loans.
- “Pay As You Earn” Proposal to Address Student Loan Debt. On Wednesday, October 26, President Obama announced his new “Pay as You Earn” proposal to lower student loan payments. According to the White House, 1.6 million student borrowers will be able to reduce their monthly student loan payments to 10 percent (currently 15 percent) of their discretionary income starting in 2014. The plan will also forgive the balance of students’ debt after 20 years of payments (instead of 25 years). Republicans have criticized the plan because they believe it will only impact a small percentage of student loan borrowers (four percent).
Beginning in January 2012, the plan also offers student borrowers the option to consolidate their federal student loans and receive up to a 0.5 percent reduction in their interest rate on some of their loans. Republicans assert that only 16 percent of student loan holders can take advantage of the proposed consolidation option.
- Congressional Hearings. On Wednesday, November 2, a House Natural Resources Subcommittee will hold an oversight hearing on “North American Offshore Energy: Mexico and Canada Boundary Treaties and New Drilling by Cuba and Bahamas.” That afternoon, the full Committee has scheduled an additional day of hearings (at the Minority’s request) on the Joint Investigation Team’s report into the Deepwater Horizon disaster, but the hearing is unlikely to occur as scheduled. On Tuesday, November 8, the Senate Energy and Natural Resources Committee will meet to consider market developments for domestic natural gas, including the approval process and potential for liquefied natural gas exports.
- Mining Agency Merger. Interior Secretary Ken Salazar issued a Secretarial Order, effective December 2, directing staff to evaluate how best to integrate the Office of Surface Mining Reclamation and Enforcement into the Bureau of Land Management and to develop a schedule by March 1, 2012. Senate Energy and Natural Resources Committee Ranking Member Lisa Murkowski (R-AK) has expressed concerns with the proposal and questioned whether it would require Congressional approval to amend the separate laws that established each agency.
- OCS Workplace Safety Rule. Offshore operators are required to implement a Safety and Environmental Management System rule by November 15. The Bureau of Safety and Environmental Enforcement has issued a formal Notice to Lessees to clarify and provide further guidance on implementation.
- Offshore Wind. The Bureau of Ocean Energy Management is seeking public comments on concerns regarding historic properties that may be affected by the proposed commercial licensing of offshore wind projects off the coasts of Rhode Island and Massachusetts. Comments are due by November 10.
- Natural Gas Wastewater Standards. Comments on EPA’s proposed schedule to develop natural gas wastewater standards (for shale gas and coal bed methane operations) are due November 25.
- Natural Gas Pollution Drilling Standards. EPA is extending the public comment period for stakeholders to comment on proposed updated standards to reduce air pollution from oil and gas drilling operations, from October 24 to November 30.
- Western States Solar Development. The Interior Department has released a Supplement to the Draft Programmatic Environmental Impact Statement for Solar Energy Development in Arizona, California, Colorado, Nevada, New Mexico, and Utah. Developing “solar energy zones” is intended to incentivize development, including the associated transmission, in appropriate areas. Public comments on the Supplement will be accepted for 90 days once published in an upcoming Federal Register notice. Public hearings will be held November 30 – December 8 in three Western states. After further consideration of comments, the Bureau of Land Management will prepare the Final Programmatic Environmental Impact Statement and Record of Decision.
- Florida Everglades. On Thursday, November 3, the House Committee on Natural Resources, Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs will hold a hearing regarding priorities for Florida Everglades restoration.
- Stream Buffer Zone Rule. On Friday, November 4, the House Committee on Natural Resources, Subcommittee on Energy and Mineral Resources will hold an oversight hearing concerning rewriting the stream buffer zone rule. Joseph Pizarchik, Director of the Office of Surface Mining Reclamation and Enforcement at the U.S. Department of Interior, will testify.
- Motor Fuel Standards. On Wednesday, November 2, the House Committee on Science, Space and Technology, Subcommittee on Energy and Environment will hold a hearing concerning motor fuel standards.
- Effluent Guidelines. EPA is announcing the final 2010 Effluent Guidelines Program Plan which is required under the Clean Water Act. After considering rulemakings and public comment, EPA has decided to develop effluent guidelines and standards for the discharge of wastewater from the Coalbed Methane Extraction (CBM) industry and will develop pretreatments requirements for discharges of mercury from the dental industry and for the discharges of wastewater from the Shale Gas Extraction (SGE) industry.
- Concentrated Animal Feeding Operations. EPA is proposing several options to acquire information for the National Pollutant Discharge Elimination System (NPDES) Concentrated Animal Feeding Operation (CAFO) Reporting Rule. Information gathered will be used by EPA to meet water quality protection responsibilities under the Clean Water Act (CWA). The purpose of the proposal is to improve and restore water quality by collecting facility-specific information that would improve EPA’s ability to implement the NPDES program and to ensure that CAFOs are complying with the requirements of the CWA. Comments on this proposed action must be received on or before December 20, 2011. EPA plans to hold two webinars in November to provide an overview and to answer questions about the proposed rule requirements.
- House to Vote on Financial Services Proposals. Four legislative proposals are set to be considered by the House this week. They include the Small Company Capital Formation Act of 2011 (H.R. 1070); a proposal to amend the securities laws to establish certain thresholds for shareholder registration (H.R. 1965); the Entrepreneur Access to Capital Act (H.R. 2930); and the Access to Capital for Job Creators Act (H.R. 2940).
- Senate to Examine Speculation in Commodities Markets. On Thursday, November 3, the Senate Committee on Homeland Security and the Governmental Affairs Permanent Subcommittee on Investigations will hold a hearing titled, “Excessive Speculation and Compliance with the Dodd-Frank Act.” The hearing will be on speculation in the commodities markets and implementation of the Dodd-Frank Act’s provisions on speculative position limits for futures, options and swap contracts for oil and other commodities. Witnesses will include Gary Gensler, Chairman of the Commodity Futures Trading Commission, and a panel of experts.
- House Financial Services Subcommittee to Hold Hearing on Private Mortgage Market Plan. On Thursday, November 3, the House Financial Services Capital Markets and GSEs Subcommittee will hold a hearing to discuss the Private Mortgage Market Investment Act, a legislative proposal from Subcommittee Chairman Scott Garrett (R-NJ) to reform the secondary mortgage market to ensure robust private investment in the U.S. mortgage market without a government guarantee.
- House Subcommittee to Hold Field Hearing to Discuss Regulatory Burden on Banks, Small Businesses. On Monday, October 31, the House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a field hearing in Wausau, Wisconsin titled, “Regulatory Reform: Examining How New Regulations are Impacting Financial Institutions, Small Businesses and Consumers.”
- House Financial Services to Review Consumer Financial Protection Bureau. On Wednesday, November 2, the House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a hearing titled, “The Consumer Financial Protection Bureau: The First 100 Days.”
- SEC to Hold Capital Formation Roundtable. On Monday, October 31, the Securities and Exchange Commission Advisory Committee on Small and Emerging Companies will hold an open meeting to discuss capital formation issues relevant to small and emerging companies.
OTHER FINANCIAL SERVICES NEWS
- Obama Administration Revises Foreclosure Prevention Program. On October 24, 2011, President Obama announced changes regarding the Home Affordable Refinance Program (HARP) in an attempt to help more troubled homeowners by enabling them to refinance high loan-to-value mortgage loans at current low interest rates. The enhanced HARP will be available through December 31, 2013. Guidance and operational details will be issued to lenders by November 15, 2011, and the Federal Housing Finance Agency (FHFA) expects that some lenders will be able to accommodate mortgage applications based on the enhancements to HARP by December 1, 2011. FHFA also expects that some enhancements, such as the delivery of loans with loan-to-value (LTV) ratios above 125 percent, will be operational during the first quarter of 2012.
- Super Committee Health Cuts. Super Committee Democrats presented the panel with a proposal to reduce the deficit by $3 trillion this week, including revenue increases and significant cuts to the Medicare program. The proposal would cut Medicare by $400 billion divided between benefit cuts and provider payment reductions. While specific details have not been released, the magnitude of reported Medicare cuts is comparable to levels discussed in the deficit reduction group negotiations led by Vice President Biden.
- Energy and Commerce Hearing. The House Energy and Commerce Committee Subcommittee on Health has scheduled a hearing on Wednesday, November 2, titled, “Do New Health Law Mandates Threaten Conscience Rights and Access to Care?”
- Senate VA Hearing. The Senate Committee on Veterans’ Affairs has scheduled a hearing on Thursday, November 10, titled, “VA Mental Health Care: Addressing Wait Times and Access to Care.”
- Health Subsidy Calculations Legislation. This week, the House approved H.R. 2576, which would modify the calculation of modified adjusted gross income for purposes of determining eligibility for certain health care programs. The bill would align the income definition for Medicaid to more closely reflect how it is measured in other federal means-tested programs, saving an estimated $13 billion over ten years. The House also approved H.R. 674 that would repeal an upcoming three percent government contractor payment withholding requirement that includes taxable Medicare provider payments, which was offset by the subsidy income calculation bill. The bills have been combined and sent to the Senate for consideration, though there is some concern the offset measure could be used to pay for other health related measures such as a physician fee fix and health extenders package expected before the end of the year.
Medicare payments rules, including the anticipated 29 percent reduction in physician payments, are also expected to be released in the coming days.
- Regulations. The Center for Medicare and Medicaid Services (CMS) released notices related to Part A and B premiums, deductibles and coinsurance amounts for calendar year 2012. The Part A Premiums for CY2012 for the uninsured aged and for certain disabled individuals who have exhausted other entitlement have been set at $451 and a reduced premium of $248. The Medicare Part B rates for CY2012 are monthly actuarial rates of $199.80 for aged enrollees and $192.50 for disabled enrollees, premium rate of $99.90 (down from $115.40 in CY 2011), and an annual deductible of $140.00 for all Part B beneficiaries. For CY 2012, the inpatient hospital deductible will be $1,156. The daily coinsurance amounts for CY 2012 will be (1) $289 for the 61 through 90 day of hospitalization in the benefit period, (2) $578 for lifetime reserve days and (3) $144.50 for the 21 through 100 day of extended care services in a skilled nursing facility in a benefit period.
OTHER HEALTH NEWS
- MedPAC Meeting. The Medicare Payment and Advisory Commission has scheduled a public meeting on November 3 and 4, with an agenda to be released in advance of the meeting. Public comments will be accepted for a week following the meeting.
- MACPAC Meeting. The Medicaid and CHIP Payment Advisory Commission has scheduled a public meeting on November 17 and 18.
- IOM Meetings. The Institutes of Medicine will hold a workshop convened by the National Cancer Policy Forum on October 31 and November 1 to examine the role of obesity in cancer survival and recurrence, potential interventions and to identify gaps in current knowledge.
International, Defense, Homeland Security
- Africa Developments. At a hearing on October 25, House Foreign Affairs Committee (HFAC) members were, on balance, supportive of the Obama Administration’s October 14 decision to deploy approximately 100 U.S. military advisers to Central Africa to help several governments in the region to counter the Lord’s Resistance Army (LRA). However, HFAC members were generally more circumspect than their Senate Foreign Relations Committee (SFRC) counterparts, who received a classified briefing on the deployment the week before. Congressman Jeff Duncan (R-SC) and Congressman Brad Sherman (D-CA) expressed a desire for more clarity on the scope of the deployment. Congressman Dana Rohrabacher (R-CA) and Congressman Gerry Connolly (D-VA) wanted the Administration to provide a cost estimate. On the other hand, there has been little public reaction in Congress so far to reports of U.S. drone attacks from bases in Ethiopia and Djibouti against al-Qaida positions in Yemen and al Shabaab forces in Somalia.
- Pakistan/Afghanistan Developments. At an HFAC hearing on October 27, Secretary of State Hillary Clinton encountered bipartisan skepticism regarding the Administration’s request for patience toward, and robust ongoing assistance for, Pakistan’s approach on confronting the Haqqani network and other insurgent groups along the Pakistan-Afghanistan border. HFAC Chairwoman Ileana Ros-Lehtinen (R-FL) expressed doubts that the Administration’s policy of sustained engagement with Pakistan would work. Meanwhile, Ranking Member Howard Berman (D-CA) called for a review of the more than $2 billion in annual U.S. security assistance to Pakistan.
- Iraq Developments. Although President Obama’s October 21 announcement of a planned withdrawal of all U.S. combat troops from Iraq by the end of 2011 has gone over well with the Democratic base, most conservatives have sharply opposed the decision. The Republican presidential field is unified in its opposition. Furthermore, 12 skeptical Senate Armed Services Committee (SASC) members have written SASC Chairman Carl Levin to request a hearing on the issue. Senator Joe Lieberman (I-CT) and all SASC Republicans other than Senator Susan Collins (R-ME) signed the letter.
- Defense Spending Developments. The Budget Control Act includes a “trigger” of automatic, across-the-board spending reductions, including up to additional $600 billion in the defense budget, if the Super Committee does not find an additional $1.2 trillion in security and non-security cuts or additional tax revenues by later this fall. The Obama Administration wanted the trigger to include a significant sum for defense in order to encourage pro-defense Republicans to reach a compromise on other revenue enhancements and spending reductions and thereby avoid what some see as draconian defense cuts. The Administration’s approach may be having an impact, as Speaker of the House John Boehner (R-OH) stressed the need last week to avoid triggering the automatic defense spending reductions. Meanwhile, House Armed Services Committee Ranking Member Adam Smith (D-WA) noted how a balanced package of tax raises and targeted spending cuts could accomplish the Speaker’s goal.
- Trade Developments. South Korean President Lee Myung-bak’s ruling Grand National Party (GNP) faces growing incentives to move quickly to approve the pending U.S.-Korean Free Trade Agreement (KORUS FTA) in the National Assembly, in the face of the GNP’s declining popularity among the Korean electorate. The latest evidence of that trend came in Wednesday’s race for the mayoralty of Seoul, where independent outsider Park Won-soon defeated the GNP’s Na Kyung-won by a 53-46 percent margin, overcoming the South Korean capital’s generally pro-GNP leanings. Pro-KORUS GNP legislators in the National Assembly are increasingly skittish, and the left-leaning opposition Democratic Party formally announced its opposition to KORUS last week, despite the previous Democratic Administration having negotiated the FTA in the first place. Nevertheless, the Korean parliament is expected to pass the agreement in the near term, as KORUS still garners a 55 percent approval rating among Koreans. However, many observers do expect the souring political mood in Korea to contribute to more challenging U.S.-Korean implementation negotiations over entry into force of KORUS, after the National Assembly passes the FTA. President Obama signed into law the U.S. implementing legislation for KORUS on October 21.
On October 26, the Super Committee held a public hearing during which Congressional Budget Office (CBO) Director Douglas Elmendorf discussed security and non-security discretionary outlays. The hearing revealed the continued existence of a strong ideological divide between Democrat and Republican members of the committee, with Democrats focusing on tax reform measures and reductions to discretionary defense spending and Republicans stressing the need for mandatory spending cuts and non-tax based revenue sources.
Also earlier this week, behind closed doors, Super Committee members discussed dueling Democratic and Republican deficit reduction plans. Committee Democrats presented a proposal that would reduce the deficit by around $3 trillion over 10 years. The plan includes $1.3 trillion in tax increases and would reportedly cut Medicare and Medicaid spending by nearly $500 billion. The Democrats’ proposal does not have the support of all Super Committee Democrats – Representative Jim Clyburn (D-SC) opposed the plan’s cuts to health care spending, and a number of House Democrats have stated they would oppose such a plan. Super Committee Republicans and House Speaker John Boehner (R-OH) have also dismissed the Democrats’ plan, countering with their own proposal totaling around $2.2 trillion in deficit reduction over a 10-year period. Republican savings are accomplished primarily through targeting mandatory spending, including greater health care cuts than those proposed by Democrats. However, 25 percent of the total savings would come from increases in non-tax revenue, such as the sale of government wireless spectrum. Super Committee Democrats have rejected this proposal as well.
The Super Committee is under continued pressure to have some measure of agreement by early November in order to give the Congressional Budget Office time to score their proposal, which the Super Committee itself must vote on by November 23 in order to maintain “fast track” procedures of any legislation they report. Given the relative lack of progress thus far, it is expected that House and Senate Leaders will continue to become more actively involved in discussions in order to help spur a result by November 23.
The Super Committee will hold its next public hearing on November 1, with former Senator Alan Simpson (R-WY) and former White House Chief of Staff Erskine Bowles scheduled to testify.
- Tax Reform in Super Committee Deliberations. Significant disagreements between the parties over policy outcomes and revenue targets continue to persist, as evidenced by the differing proposals released by Super Committee Democrats and Republicans earlier this week. Whether, and to what degree, tax provisions will be included in any final agreement remains an important and open question. The Super Committee has been briefed on tax reform options, and discussion continues among various Super Committee Members regarding the possibility of incorporating business entity tax reform (whereby the corporate tax base is broadened and marginal tax rates are lowered) as part of any forthcoming Super Committee proposal. However, as evidenced by recent comments from House Speaker John Boehner (R-OH), it remains unlikely that the Super Committee will be able to actually include fundamental reform in its forthcoming legislative proposal given the truncated timeframe of the Super Committee proceedings. Short of this, other possible options include setting up a process whereby business and/or individual fundamental reform could be compelled next year or including various piecemeal tax provisions in their final legislative product while leaving fundamental reform to be dealt with at a later point in time.
- Camp Releases Territorial Tax Reform Plan For Comment. On October 26, Chairman of the House Ways & Means Committee Dave Camp (R-MI) released a discussion draft of a proposal to reform the corporate tax regime, changing it from a worldwide system of taxation to a territorial system. Under the plan, domestic corporations would receive a 95 percent deduction for the foreign-source portion of dividends received from U.S. controlled foreign corporations. To be eligible for the deduction, corporations would be subject to a one-year holding period on the stock on which the dividend is paid. To help finance the cost of transitioning to a territorial system, domestic companies would have to pay a one-time tax on all foreign revenue currently held offshore at a rate of 5.25 percent and could pay such tax over an eight-year period.
There is strong interest in the business community to move from a worldwide system of taxation to a territorial system. Many Congressional Republicans favor reforming the international tax regime to a territorial system to make U.S. businesses more competitive; though many Democrats are concerned this would encourage American corporations to shift operations overseas. The Committee draft includes a number of anti-base erosion options and specifically invites comment on the relative merits of the various proposals.
In addition to the territorial proposal, the draft proposes dropping the top corporate tax rate from 35 percent to 25 percent, using yet unspecified base-broadening measures to pay for the reduction. It is thought that such base-broadening would need to total in the neighborhood of $1 trillion to offset the cost of moving to a 25 percent top rate.
The release of the Camp draft should not be perceived as a sign that tax reform is imminent, as the territorial proposal is itself incomplete, and the draft does not begin to address the multitude of other issues relating to both corporate and individual tax reform. It is not anticipated that any major movement will occur prior to 2012 or 2013.
- House Passes Repeal of Three Percent Withholding Law. On October 27, the House passed legislation to repeal a three percent withholding tax on private companies with government contracts set to take effect in 2013. The measure passed with strong bipartisan support (405-16). To pay for the cost of repeal – estimated at $11.2 billion over 10 years – the House passed separate legislation to replace the Modified Adjusted Gross Income (MAGI) calculation for determining eligibility for premium subsidies for the health insurance exchanges included in the Affordable Care Act and for determining Medicaid eligibility beginning in 2014, with the income formula used in all other federal programs. The prior week, the Senate rejected a version of the three percent repeal bill introduced by Minority Leader Mitch McConnell (R-KY). The McConnell bill included certain discretionary spending cuts to offset the cost of repeal. The measure, which received bipartisan support, fell three votes (57-43) shy of the 60 required to bring the bill to the floor for debate. The Obama Administration included a delay of the effective date of three percent withholding in its own jobs proposal, but issued a statement in advance of the vote objecting to the offsets in the Senate version.
- Tax Reform Hearings Next Week. No hearings are scheduled in the Senate Finance or House Ways & Means Committees next week.
The Senate Finance Committee postponed a hearing scheduled for Wednesday, October 12 on “Tax Reform Options: Capital Investment and Manufacturing.” It is likely that hearing will be rescheduled for sometime in November. The previously announced witnesses for that hearing were: Dr. Jane Gravelle, Senior Specialist in Economic Policy, Congressional Research Service, Library of Congress; Douglas Holtz-Eakin, Ph.D., President, American Action Forum; Dr. Robert D. Atkinson, President, Information Technology and Innovation Foundation; Dr. J.D. Foster, Norman B. Ture Senior Fellow, Economics of Fiscal Policy, The Heritage Foundation; Dr. Michelle Hanlon, Associate Professor of Accounting, Massachusetts Institute of Technology, Sloan School of Management.
- Spectrum. A high tech coalition wrote to the Joint Select Committee on Deficit Reduction on October 27, urging the members to move forward on government investments in research and development, incentive auctions of broadcast spectrum, a tax holiday to entice companies to move off-shore earnings back to the United States and immigration reform for highly skilled foreign workers. The Business Software Alliance, Tech America, TechNet and the Information Technology Industry Council joined the recommendations as well as companies that include Oracle, Microsoft, eBay, Cisco and T-Mobile.
The coalition said that incentive spectrum auctions would free up spectrum for wireless devices such as smartphones and tablets. Even after dedicating some of the auction revenue to participating broadcasters who relinquish their spectrum, the coalition said in their letter that the federal government could still raise $24.5 billion
- Wireless Tax Moratorium. There is talk that H.R. 1002, Rep. Zoe Lofgren’s (D-CA) Wireless Tax Fairness Act, may reach the House floor under suspension rules early next week. The measure would prohibit local governments from imposing any new “discriminatory” taxes on mobile services, mobile service providers or mobile devices during the next five years.
- Online Piracy Protection. On October 26, a bipartisan group of House members – Judiciary Committee Chairman Lamar Smith (R-TX), Intellectual Property Subcommittee Chairman Bob Goodlatte (R-VA), Ranking Member John Conyers (D-MI) and Representative Howard Berman (D-CA) – led the introduction of H.R. 3261, the Stop Online Piracy Act. The bill’s proponents say it improves the protection of intellectual property online and combats the distribution of counterfeit goods online. In particular, the bill gives the Attorney General authority to seek injunctions against foreign websites that steal and sell American “innovations” and products; increases criminal penalties for individuals who traffic in counterfeit medicine and military goods; and improves coordination between American IP enforcement agencies. The House Judiciary Committee has scheduled a hearing on H.R. 3261 for November 16. Various public interest groups oppose the measure, including Public Knowledge, which calls the bill “dangerous” and has launched a campaign opposing the effort.
- Consumer Data. Senate Commerce Committee Chairman Jay Rockefeller (D-WV) sent letters to Visa and MasterCard this week asking the companies to confirm whether they plan to provide customer data to third-party advertisers.
According to a Wall Street Journal article, the credit card companies have contemplated using consumers’ credit card purchases to help them target consumers with online ads. "If true, the Journal article raises serious questions on the privacy implications of Visa's marketing strategy," Rockefeller wrote in his letter to Visa. In his letter to MasterCard, he said the article raises questions "about MasterCard's collection and use practices and the firm's policy on customer privacy."
MasterCard reportedly circulated a document to advertisers earlier this year about linking Internet users with their purchasing behavior. Because MasterCard does not collect people's names or addresses when processing transactions, the company would have to use other means to identify customers. A Visa patent application published in April describes using information from DNA databases, social networks, credit bureaus, search engines and other sources to create consumer profiles for ad targeting. Rockefeller sought the companies’ responses by November 30.
- FCC Open Meeting. On October 27, the Federal Communications Commission (FCC) held its monthly open meeting. At the meeting, the Commission:
1.) Unanimously approved an Order and Notice of Proposed Rulemaking (NPRM) to reform the Universal Service Fund to move away from rural phone subsidies in favor of broadband support. The reform creates a new Connect America Fund with an annual budget of no more than $4.5 billion and aims to extend broadband services to the 7-plus million rural residents who are underserved – putting the country on the path toward universal broadband in 10 years. In approving the action, the Commission also agreed to phase out most intercarrier compensation payments between carriers that exchange traffic and give rural telcos and others a transition period and other means to adapt to the reform. The FCC estimates that approximately 500,000 jobs will be created during the next six years with this effort and that an increased marketplace will benefit “Main Street” businesses across the country. The FCC action also sets aside $500 million for a new “Mobility Fund” to specifically expand advanced mobile broadband access to “tens of thousands of road miles,” including dedicated support for Tribal areas through wireless and satellite services. The Commission also created a $100 million fund to support satellite and wireless broadband service to the most remote consumers. To receive funding through the Connect America Fund, carriers will have to demonstrate that they are deploying broadband to customers and must meet a set of performance criteria that enable use of common applications such as voice over Internet protocol (VoIP), two-video conferencing and e-mail. The FCC’s actions may prove troublesome for companies still dependent on USF telephone subsidies as well as competitive local exchange carriers, which will lose their intercarrier compensation revenue, but may present opportunities for satellite providers.
2.) Adopted further NPRM to modernize television broadcast public inspection files by requiring commercial and noncommercial television broadcast stations to submit public files on an online public file hosted by the Commission. Broadcasters say this move to an online regime will be onerous; and
3.) Announced the first ever nationwide test of the Emergency Alert System to be held on November 9 at 2:00 p.m. Eastern Standard Time. Held in conjunction with the Federal Emergency Management Agency (FEMA), the test will assess the reliability and effectiveness of the EAS as a way to alert the public in the event of a national emergency.
- Next Generation 911. On September 22, 2011, the FCC adopted an NPRM in the Next Generation 911 (NG911) proceeding. The NG911 NPRM seeks comment on a number of issues related to accelerating the development and deployment of NG911 technology that will enable the public to send emergency communications to 911 Public Safety Answering Points (PSAPs) via text, photos, videos, and data and enhance the information available to PSAPs and first responders for assessing and responding to emergencies. On October 12, 2011, the Federal Register published a summary of the NG911 NPRM. Comments must be filed on or before December 12, 2011; and reply comments must be filed on or before January 10, 2012.
- Senate EPW Will Markup in November. As we mentioned in last week’s edition of the Capital Thinking report, the Senate Environment and Public Works (EPW) Committee plans to markup the highway title of a two-year reauthorization bill, referred to as “MAP-21,” on November 9. MAP-21 was outlined this past summer and calls for two years of funding at current levels, which requires an additional $12 billion in revenue. While efforts are ongoing, the Senate Finance Committee has not yet identified the additional revenue.
- Timeline for FAA and SAFETEA-LU Reauthorization in the House. House Transportation and Infrastructure (T&I) Committee Chairman John Mica (R-FL) indicated on October 24 that he hopes to send a four-year reauthorization of the Federal Aviation Administration to the President's desk by the end of the year. When the last FAA extension was passed in September, Chairman Mica noted several issues that remain unresolved, including: FAA funding levels, long-term issues related to the Essential Air Service program, rules for airline industry union elections and changes to lithium battery transportation rules. Simultaneously, House GOP leaders are trying to find up to $100 billion in additional revenue to fund the six-year surface transportation reauthorization. With this work ahead, and with the Super Committee process to unfold in late November-December, it continues to be unclear when Chairman Mica will unveil and mark-up a draft of his SAFETEA-LU reauthorization bill.
- Boxer Questions Mica on SAFETEA-LU Reauthorization Funding. This week, Chairman Boxer questioned Chairman Mica as to whether the current House proposal to identify additional revenue would maintain “current levels.” SAFETEA-LU authorized $286.4 billion for the nation's highway programs over fiscal years 2005-2009 (the level cited by Chairman Mica), and short-term extensions of the bill have kept the programs operating at the increased funding level of its final year. Chairman Boxer claims that maintaining overall current funding levels, after accounting for inflation, would therefore require $339 billion over six years. During a conference call with industry stakeholders on October 26, Boxer urged the transportation community to press Mica on what she believes to be “inconsistencies” in his proposal – a sentiment reflected in a letter she sent to the House T& I Chairman earlier that day. Notably, that letter also included a statement from Boxer that expressed her openness and willingness to work with Mica on a six-year bill – a new direction for the Senator who has, up until this point, been focusing on passing a two-year bill as the maximum achievable duration.
- Reid Plans to Hold Vote on the Rebuild America Jobs Act. On October 21, Senate Majority Leader Harry Reid (D-NV), along with Senator Amy Klobuchar (D-MN) and Secretary of Transportation Ray LaHood, announced that the Senate would be bringing up and voting on the Rebuild America Jobs Act -- essentially the portions of President Obama’s American Jobs Act focused on transportation infrastructure investment. The proposal provides $50 billion for road, transit, rail and aviation investments, and $10 billion for the creation of a national infrastructure bank (NIB). The infrastructure investments include $27 billion to rebuild roads and bridges, $9 billion to repair transit systems, $5 billion for projects selected through a competitive grant program, $4 billion for construction of the high-speed rail network, $2 billion to improve airport facilities and $1 billion for a NextGen air traffic control system. The proposal’s NIB is modeled after the NIB bill that is sponsored by Senator John Kerry (D-MA) and Senator Kay Bailey Hutchinson (R-TX) and will leverage private and public capital to help fund a broad range of infrastructure projects. The proposal would be paid for with a 0.7 percent surtax on households earning more than $1 million per year. Reid plans to hold a vote on the measure this coming week, but it is unlikely that it will receive the required 60 votes.
FY2012 Transportation, Housing and Urban Development Appropriations
- Senate to Move Minibus With T/HUD Bill Included. On October 21, under a unanimous consent agreement, the Senate voted to invoke cloture on a minibus appropriations bill (H.R. 2112), which includes the FY2012 Transportation, Housing and Urban Development (T/HUD) Appropriations Act. By the terms of the agreement, the remaining amendments will remain in order and will be voted on when the Senate returns to session on Monday, October 31, after which the Senate will vote on final passage. A number of transportation-related amendments have been considered, but none have been adopted making any significant policy or funding changes to transportation programs. Notably, the Senate voted to table Senator John McCain’s (R-AZ) amendment that would prohibit transportation enhancement funds from being used on “lower-priority projects,” such as transportation museums, scenic beautification, scenic or historic highway programs and landscaping.
- Differences Between the House and Senate FY2012 T/HUD Bills. There are major differences between the House and Senate versions of the T/HUD appropriations bill that will have to be reconciled. The House bill sets a dramatically lower obligation limitation for Highway Trust Fund programs, whereas the Senate maintains the obligation limitation at current levels. In light of the six month SAFETEA-LU extension at current levels, it is likely that the obligation limitation will track this authorized level. On the discretionary side, the House bill eliminates funding for the TIGER program, funds New Starts at $1.56 billion and makes significant cuts to Amtrak. The Senate version increases funding for TIGER and New Starts (providing $1.95 billion) and maintains Amtrak funding, meeting its budget authority target instead through more extensive cuts and rescissions to HUD programs. The Senate bill also provides that Bus Rapid Transit (BRT) projects are to be funded out of the discretionary Bus and Bus Facilities account, thus freeing additional funds for rail projects in the New Starts pipeline. In addition, the House bill includes a provision that would limit the maximum federal share for Full Funding Grant Agreements (FFGAs) to 50 percent, which would affect a number of projects in the pipeline, while the Senate maintains the maximum federal share at 60 percent.