Week Back And Week Ahead - Monday, December 22, 2014

Erin Carson, Lead Analyst Monday December 22nd 2014

The Week Behind in Congress

The House was out last week, but the Senate finished its remaining 2014 work, passing and sending 19 House-passed bills to the President for signature and confirming four additional executive nominations. Perhaps most notably, Senators passed H.R. 5771, the “tax extender” bill containing a number of provisions with direct impact on individual and corporate 2014 tax filings.  The President also signed into law the “crominubus” spending bill last week -- the $1.1 trillion appropriations act passed by the Senate the prior Saturday that funds all federal agencies through an entire fiscal year, except for the Department of Homeland Security, which the bill funds through February.

A detailed look at these two legislative packages and other end-of-year congressional action is outlined below. 

Impact of Key Legislation

Impact of the Extender Bill on Corporate and Individual 2014 Filings

The Senate passed H.R.5771 by a vote of 76-16. H.R.5771, the Tax Increase Prevention Act of 2014, extends until the end of 2014 a number of tax code provisions that expired at the end of 2013.  This extension will allow tax filers to use these breaks in their FY2014 tax returns.

Senate Majority Leader Harry Reid (D-NV) held off on H.R.5771 Senate consideration until the last possible moment to ensure that Senators had to stay around and approve pending Presidential appointees.  In late November it appeared that outgoing House Ways and Means Chairman Dave Camp (R-MI) and outgoing Senate Majority Leader Harry Reid (D-NV) had reached a long desired, long-term deal on a number of expiring tax credits. However, this deal fell apart due to pressures from President Obama and angry Senate Democrats who believed that the leadership had given away too much during negotiations with House Republicans, in particular, by excluding an extension to the child care tax credit and earned income tax credit.

H.R.5771 is a last minute two-week extension which no one in Congress is happy with but which a strong majority of members agree is necessary.  Included in the package are a number of tax extensions, including an extension for the bipartisan supported research and development  credit. Many Democrats and budget watchdogs, such as Sen. Tom Colburn (R-OK), voiced frustration with the large business breaks included in the bill. Still, most opponents, including Colburn, ultimately voted to pass the legislation.

Provisions in the bill affecting individual taxpayers include:

  • the deductibility of state and local sales taxes;
  • the deduction of certain expenses for elementary and secondary school teachers;
  • the extension of the above the line deduction for qualified tuition;
  • and the extension of tax-free distributions from individual retirement plans for charitable purposes.  

H.R.5771 also included 30 business related extensions besides the R&D credit. These include:

  • the bonus depreciation;
  • increased section 179 expensing; and
  • the subpart F exception for active financing income.  

H.R. 5771 also extends 11 energy-related provisions including a wind energy tax break.  

The Committee on Ways and Means provides a complete section by section analysis, here.

Impact of Policy Riders $1.1 Trillion “Cromnibus” Spending Bill

President Obama signed the spending bill into law on December 16, providing fiscal year 2015 appropriations through September 30, 2015 for all agencies except the Department of Homeland Security, which is only funded through February 27, 2015.  

According to a statement from the Office of Management and Budget after the President signed the bill:

“For the first time since the financial crisis, this agreement marks two consecutive stable years of funding for agencies, allowing them to adapt to changing needs while also giving agencies the certainty that will allow them to plan and execute their budgets to serve the American people.

"As the President has said, the legislation is a compromise and no one got everything they wanted.  But, it is a step towards proving that a divided government can work without governing by crisis or threatening an economic recovery that’s growing stronger.  Building off last year’s efforts to reverse harmful sequestration cuts, the legislation protects critical investments across the government that will contribute to growing our economy, creating jobs, and strengthening the middle class.”

The most controversial points to the House-passed bill were the provisions that rolled back limits set by the Dodd-Frank Act, and those which increased campaign contribution limits.

In addition to funding federal agencies, the spending bill also contained a number of provisions with notable impact to certain individuals, including:

  • Retirees: The bill includes the Multiemployer Pension Reform Act of 2014, which, among other provisions, allows multi-employer pension plans to cut back benefits that are currently being received by retirees. According to reporting from the Washington Post, the provision will directly impact more than 10 million workers and retirees in building and construction, retail, manufacturing, trucking and transportation industries. Multiemployer pension plans will be allowed to reduce benefits for participants under 75, and, to a lesser degree, between 75 and 80 years old.
  • Abortion advocates and pro-life advocates: In a strange twist, both Planned Parenthood and pro-life advocacy groups supported the spending bill. The law contains provisions banning federal funding for abortions and some contraceptive services, which is a win for the pro-life lobby, but the bill does not further restrict women’s access to abortion services. Planned Parenthood said that since a spending bill under an entirely Republican Congress would cut funding for additional services it was important to support the current legislation.
  • Medical marijuana retailers and users: The bill ended the prohibition on medical marijuana. The law prohibits the federal government from raiding shops that sell medical marijuana for medical use.
  • Bankers: In one of the most controversial measures in the bill, the legislation curtails the Dodd-Frank Act's regulations on banks that trade in the same types of derivatives attributed to starting the 2008 financial crisis and allows banks access to taxpayer-backed insurance. The measure was hotly contested by Democratic Sen. Elizabeth Warren (D-MA), who formed an unlikely alliance with fiscal conservative Republicans, who also opposed the provision. 
  • National Party Committees: The bill increased the campaign contribution spending limits from single donors to national party committees from a single donor could give to national party committees from $97,200 to $777,600 in some cases. Opponents to the provision say it will benefit establishment Republicans and hinder the campaigns of outside candidates. 

Week Behind: Senate Floor Action

In addition to the extender bill, the Senate also passed 19 bills to be sent on to the President, as well as two of its own measures and a handful of executive nominations. 

The Senate passed two of its own bills last week, which will next be sent to the House for consideration in the next Congress:

 S. 706: Transnational Drug Trafficking Act of 2013

S. 1744: Security Clearance Accountability, Reform, and Enhancement Act

 

The Senate passed 20 House bill last week, 19 of which will now to the President for final approval:

 H.R. 5771: To amend the Internal Revenue Code of 1986 to extend certain expiring provisions and make technical corrections, to amend the Internal Revenue Code of 1986 to provide for the tax treatment of ABLE accounts established under State programs for the care of family members with disabilities, and for other purposes.

H.R. 2591: To amend certain provisions of the FAA Modernization and Reform Act of 2012.

H.R. 2754: Collectible Coin Protection Act

H.R. 1206: Permanent Electronic Duck Stamp Act of 2013

H.R. 2901: Senator Paul Simon Water for the World Act of 2014

 H.R. 3572: To revise the boundaries of certain John H. Chafee Coastal Barrier Resources System units.

 H.R. 4276: Veterans Traumatic Brain Injury Care Improvement Act of 2014

H.R. 1068: To enact title 54, United States Code, “National Park Service and Related Programs”, as positive law.

 H.R. 4416: To redesignate the facility of the United States Postal Service located at 161 Live Oak Street in Miami, Arizona, as the “Staff Sergeant Manuel V. Mendoza Post Office Building”.

 H.R. 1378: To designate the United States Federal Judicial Center located at 333 West Broadway in San Diego, California, as the “John Rhoades Federal Judicial Center” and to designate the United States courthouse located at 333 West Broadway in San Diego

 H.R. 3027: To designate the facility of the United States Postal Service located at 442 Miller Valley Road in Prescott, Arizona, as the “Barry M. Goldwater Post Office”.

 H.R. 4416: To redesignate the facility of the United States Postal Service located at 161 Live Oak Street in Miami, Arizona, as the “Staff Sergeant Manuel V. Mendoza Post Office Building”.

 H.R. 4651: To designate the facility of the United States Postal Service located at 601 West Baker Road in Baytown, Texas as the “Specialist Keith Erin Grace Jr. Memorial Post Office”.

 H.R. 5050: May 31, 1918 Act Repeal Act

 H.R. 5185: EARLY Act Reauthorization of 2014

 H.R. 5331: To designate the facility of the United States Postal Service located at 73839 Gorgonio Drive in Twentynine Palms, California, as the “Colonel M.J. ‘Mac’ Dube, USMC Post Office Building”.

 H.R. 5562: To designate the facility of the United States Postal Service located at 801 West Ocean Avenue in Lompoc, California, as the “Federal Correctional Officer Scott J. Williams Memorial Post Office Building”.

 H.R. 5687: To designate the facility of the United States Postal Service located at 101 East Market Street in Long Beach, California, as the “Juanita Millender-McDonald Post Office”.

 H.R. 5816: To extend the authorization for the United States Commission on International Religious Freedom.

 The Senate also passed H.R. 2866: Boys Town Centennial Commemorative Coin Act, but it made changes to the bill and sent it back to the House on December 15, 2014. The measure will be re-introduced and taken up in the next Congress.

The Senate  confirmed the following nominations last week:

Stephen R. Bough, of Missouri, to be U.S. District Judge for the Western District of Missouri

Antony Blinken, of New York, to be Deputy Secretary of State

Sarah R. Saldana, of Texas, to be an Assistant Secretary of Homeland Security

Vivek Hallegere Murthy to be Surgeon General

 

Week Behind -  Senate Committee Action

Only one Senate committee held a hearing last week:

Environment and Public Works – On December 17, the Subcommittee on Clean Air and Nuclear Safety held an oversight hearing entitled,  "EPA’s Proposed National Ambient Air Quality Standards for Ozone.” The panel heard testimony from the Environmental Protection Agency, the Environmental Defense Fund, the National Association of Manufacturers, the Texas Commission on Environmental Quality, and professors from the Washington University of Medicine and the Brown University School of Public Health.

Week Ahead

The 114th Congress is scheduled to convene on January 6, 2015.