O N T H E H I L L by Jim
Davidson
Released Fall 2012
A Look at the Year Ahead in Washington There are a number of important issues ahead of us in this New Year after the political results in 2012. It will be a fast and busy year as we tackle tax reform and the implementation of health reform.
T
he 2012 campaign season is long gone and it’s time to get back to business. Business advertisers can freely place their ads now that the last super PAC has closed up shop – for the moment – and relinquished the airwaves. Enough time also has passed that we can justifiably tweak those who haven’t thrown out their political yard signs or bumper stickers along with their Christmas trees in the New Year. Indeed, the newly sworn-in 113th Congress must now resume its official duties and tackle the long list of legislative items it failed to address in the 112th. By now, the irony is not lost on anyone that the costliest campaign season in American history yielded zero shift in the balance of power. The presidential race alone cost the Romney and Obama campaigns more than $2 billion. Approximately another $3.8 billion was spent on Senate and House races. With a near status quo outcome, only a few people in the Administration or in Congress will have to schedule a moving day. The Senate Democrats expanded their still filibuster-vulnerable effective majority from 53-47 to 55-45. Republicans in the House of Representatives held onto their majority, albeit with six fewer seats, completing the divided government trifecta. While the end product of this record political spending spree may strikingly resemble its starting points, both parties did emerge changed, with Democrats feeling emboldened and Republicans reflecting the need for more reflection. But there is little time for pondering the results when we count the number of issues awaiting resolution in 2013. Tax Reform. This big-ticket item likely will take center stage for much of this year. Tax reform, as a stand-alone issue, is long overdue but the urgency of addressing expiring Bushera tax rates, expiring unemployment benefits, and the mandatory spending/entitlement cuts called for in sequestration legislation, have dragged reform to the forefront early. No deal had been reached as of printing, but it would be nearly impossible to avert a fiscal crisis in the long-term without a major reexamination of the Tax Code. Luckily for DTC, discussions to avoid the fiscal cliff have centered specifically over individual
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rates and deductions rather than corporate taxes, but anything could be put on the table once the Tax Code is opened this year. Health Care. The best domestic policy change that Republicans could have hoped for if they had won the White House was to defund parts of the Affordable Care Act. HHS can resume its scheduled implementation now that this funding threat largely has evaporated. The challenge in 2013 will shift to the responsibility of the states and the federal government to establish health exchanges in 2014 and to hammer out who ultimately will be responsible for covering the uninsured. At printing, onethird of the states had declared their intent to run their own exchanges, one-third had kicked the responsibility of running them over to Washington, and the other third is split between undecideds and those opting for a partnership exchange with the federal government. Entitlement Reform. This issue is intertwined with the previous two items and might be where prescription drug manufacturers should pay the most attention. The post-election proposals offered by the President and House Republicans clearly reflected different ideologies but both were united in proposing savings to Medicare: $350 billion in the President’s first offer and $600 billion in the House GOP counter-offer. This is an arena where even the mention of benefit changes to the under-55 crowd is a non-starter to many in Congress and in advocacy groups. So it wouldn’t be surprising if a less anti-populist idea, like negotiating prescription drug prices, is circulated among Members on both sides who either want to appease core demographics or make good on their promise to seriously cut spending and manage the debt. It’s going to be a busy year. Fasten your seat belts. Jim Davidson is an attorney and founder of the public policy firm Davidson & Company. He currently chairs the Public Policy Group at the Washington law firm of Polsinelli Shughart PC, and he has been actively engaged in supporting the advertising industry on Capitol Hill for more than 20 years. He can be reached by e-mail at jhd@ davidsondc.com.