January 16, 2017 Weekly Legislative Update

Infrastructure Budget Option

On January 11, TIA Representatives met with U.S. Congressman Lou Barletta (R-PA) to consider legislative options to finance President Trump’s major infrastructure initiative.

Congressman Barletta, who serves on the Transportation and Infrastructure Committee, was one of the first members of Congress to endorse then candidate Trump, later chaired his Pennsylvania Campaign, and was recently considered for the position of Secretary of Transportation. 

Congressman Barletta is an outspoken supporter of President Trump’s proposal to spend $1 trillion on the nation’s infrastructure.  He believes to fully fund it, money should be directed from the Treasury, current taxes should continue and new and sustainable taxes (such as increase in the motor fuel tax) must be found.

Regulatory Accountability Act

TIA has written to Senate Majority Leader Mitch McConnell and Senate Democratic Leader Charles Schumer urging a timely and bipartisan vote in a support of the Regulatory and Accountability Act 2017 (RAA). The House of Representatives recently passed the bill with a bipartisan vote of 238-183.

TIA believes that federal regulations should be narrowly tailored, supported by strong and credibly data and evidence, and impose the least burden possible, while implementing congressional intent.

Now is the time for Congress to reclaim its constitutional legislative authority by ensuring agencies implement congressional intent, not the intent of the agency. With both the new presidential administration and the U.S. House of Representatives agreeing on the urgent need for regulatory reform, the Senate is presented with a once-in-a-generation opportunity to pass much-needed modernization of the Administrative Procedure Act (APA), whose rulemaking provisions have remained virtually unchanged since it was enacted in 1946.

The Senate has a unique chance to bring real structural reform to the way agencies adopt the most costly rules that fundamentally change our nation.

The RAA builds on established principles of fair regulatory process and review that have been embodied in bipartisan executive orders dating to at least the Clinton administration. The RAA stands for good governance and getting rules right by bringing transparency, accountability, and integrity to the rulemaking process at federal agencies. With the passage of RAA, Congress would be restoring the checks granted to it by the Constitution over a federal regulatory bureaucracy that is opaque, unaccountable, and at times overreaching in its exercise of authority.

The sole focus of the Regulatory Accountability Act is to make sure that agencies, for the most costly regulations, take the time to implement Congressional intent, not the intent of the agency. In short, it allows Congress and the public to reassert control over the federal regulatory bureaucracy by holding agencies more accountable for their decisions, and allowing for regulations that are better-tailored to achieve their purpose without unnecessary burdens on stakeholders.

The RAA would also increase public participation early on in the rulemaking process, require on-the-record hearings for the most costly regulations, and instruct agencies to choose the least costly option to achieve congressional intent.

2017 WOTC Campaign

A tax reform bill that will decide WOTC’s future is being finalized by the House Ways and Means Committee and headed to passage as a “budget reconciliation bill” after Congress adopts a Fiscal Year 2018 budget resolution.

 A budget reconciliation bill cannot be filibustered by the Senate and requires only a majority to pass, but for this to happen, both houses of Congress must first agree to a budget resolution setting revenues and expenditures for FY 2018.

The 114th Congress having failed to pass a budget resolution for FY 2017, GOP leaders of the new Congress resolved to pass a 2017 resolution and use it to enact a budget reconciliation bill to repeal and replace Obamacare.  The Senate has now passed this resolution and the House is scheduled to consider the measure Friday.  

As House Democrats are solidly opposed, the fate of the FY 2017 budget resolution will depend upon the fifty or so staunch conservatives who want to repeal and replace Obamacare but also want a balanced budget.  They’re galled by the fact that the Senate budget resolution they’ll be voting on will add $9.5 trillion to the deficit between now and 2026. 

For Leaders and staffs anxious to get moving on tax reform, life would be easier if the FY 17 budget resolution passed first, because baseline revenues and the deficit for FY 18 depend in a major way on what the GOP reconciliation bill does to repeal Obamacare.  

Recall that Obamacare includes major taxes on high-income individuals, pharmaceutical companies and medical device makers, as well as penalties on individuals who don’t buy health insurance and employers who don’t offer it.  Were it not for the large impact on the deficit, most of these taxes and penalties would likely be eliminated by the new Congress.    

Tax writers, needing a baseline of budget revenues to measure the overall impact of changes to the tax code, are stuck for the moment on finalizing tax reform.  A budget baseline for tax reform can always be assumed, but right now Ways and Means is waiting for the revenue results of the Obamacare repeal bill.

Republican members of House Ways and Means have been meeting since December to develop their tax reform bill, and have floated trial balloons on matters like import taxes and export rebates.  A discussion draft may be released anytime, but first there must be a document the Speaker can present to the full Republican Conference. 

Right now, we have only an outline of tax reform written by a Ways and Means Task Force headed by Chairman Kevin Brady, approved by Speaker Ryan and issued last October, that shows where Ways and Means is headed.  It’s contained in “A Better Way,” at www.Better.GOP, click on “Tax Reform.” 

It’s vital that WOTC be made permanent in the “chairman’s mark”—the tax reform bill presented to the full Ways and Means Committee for approval.  Approval is a formality because the GOP majority will already have solidified behind the Chairman’s position. 

One thing Chairman Brady hasn’t deviated from in discussions of tax reform is that “tax expenditures”—provisions in the tax code like WOTC that lose revenue—must be cut so corporate and individual tax rates can be reduced.  In effect, programs like WOTC will either be judged meritorious enough to be retained in the tax code permanently, or they will be terminated or curtailed. 

Last year, Congressman Tom Reed (R-NY) introduced TIA supported regulation to make WOTC permanent, H.R. 2754, and we were able to obtain eight Republican co-sponsors, three of whom have seats on Ways and Means: Lynn Jenkins (R-KS), Mike Kelly (R-NY), and Erik Paulsen (R-MN). 

We are pleased to report that Republican Congressman Carlos Curbelo, now in his second term representing Miami, co-sponsored H.R. 2754 last year and this year he’s won a seat on Ways and Means.  He will join the Committee for the first time at its organization meeting.  

We expect Congressman Reed to re-introduce his bill making WOTC permanent and that all co-sponsors of H.R. 2754 will co-sponsor again.  Congressman Curbelo’s co-sponsorship will being to five the number of Republican votes we can count on Ways and Means—a significant showing but still too short.  

For decisive impact on House leaders, our goal is to get half of Ways and Means Committee Republicans, 12, to co-sponsor. This means we need seven more Ways and Means Republicans to co-sponsor Congressman Reed’s bill making WOTC permanent, and this is the priority aim of our lobbying in the limited time we have before Chairman Brady introduces his mark around May. 

Our key Ways and Means targets are the following 14—we need to persuade half of them to join our cause: 

Chairman Kevin Brady (TX)

Congressman Devin Nunes (CA)

Congressman Pat Tiberi (OH)

Congressman Dave Reichert (WA)

Congressman Peter Roskam (IL)

Congressman Vern Buchanan (FL)

Congressman Kenny Marchant (TX)

Congressman Jim Renacci (OH)

Congressman Pat Meehan (PA)

Congresswoman Kristi Noem (SD)

Congressman Jason Smith (MO)

Congressman Tom Rice (SC)

Congressman David Schweikert (AZ)

Congresswoman Jackie Walorski (IN) 

Rice, Schweikert, and Walorski are new Republican members of Ways and Means.  On the Democratic side, Congressman Richard Neal (MA) is the new Ranking Minority Member, replacing Congressman Sander Levin (MI) who remains on the Committee.  Three new Democrats have also joined Ways and Means: Congressman Brian Higgins of Buffalo, NY, Congresswoman Terri Sewell of Birmingham, AL, and Congresswoman Suzan DelBene representing Washington’s 1st District, north of Seattle. 

The time is now to renew your contacts and give priority attentions to the above list of Ways and Means targets if they are from your state.  Then aim to meet, fax, or phone members of the congressional delegation from your state, and states where you have operations. 

Our message should be, 

“The Work Opportunity Tax Credit is key to job opportunities that enable veterans, people with disabilities, the homeless and others on welfare, to escape poverty and achieve upward mobility.  The jobs credit not only puts into effect the idea that the way out of poverty is through work,  it also lends vital support for jobs and economic recovery in declining urban and rural areas.  For two decades this hiring incentive, which operates through the free market with minimum red tape, has created upwards of a million jobs a year, recently reaching the 1.6 million jobs level, at a Joint Committee on Taxation estimated cost of $19 billion over ten years, or around $1,100 per hire.  WOTC, in partnership with the Earned Income Tax Credit, remains the vital bedrock of the nation’s anti-poverty safety net.  Department of Labor data shows the jobs created are in all economic sectors, with significant employment in manufacturing and healthcare as well as food service.  Professor Peter Cappelli of the Wharton School, University of Pennsylvania, has estimated that the ten-year savings from WOTC hires of welfare recipients is nearly twice the cost of the program to the Federal government.” 

Thanks for your energy and commitment to the cause.

Training and Employment Guidelines Update

The Department of Labor has issued a new “bible” for processing WOTC certifications under the PATH Act passed in December, 2015.

Change 1 to Work Opportunity Tax Credit 2015 Reauthorization Training and Employment Guidance Letter 25-15 may be accessed at the link below. 

Kindly review this document and determine whether you have any questions or problems that we should take up with the WOTC National Coordinator or Assistant Secretary of Labor for Employment and Training. 

If so, try to discuss it with your State Workforce Agency and let us know their view—SWA comments are always helpful when we bring a question to the Department of Labor.  

The Office of Management and Budget and Treasury Department (IRS) approved this document; we will take up any questions related to those agencies’ roles in WOTC with the appropriate office.

TEGL 25-15, Change 1 -- Work Opportunity Tax Credit 2015 Reauthorization Training and Employment Guidance Letter 25-15, Change 1 has been added to the ETA Advisory database and is now available at https://wdr.doleta.gov/directives/corr_doc.cfm?docn=9628.