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New Year, New Congress, New Outcomes?

New Year, New Congress, New Outcomes?

Just after the November mid-term elections, many pundits called on lawmakers to end the historic gridlock that had ground Washington to a halt. The hope was that the new Republican-lead Congress and the White House could set aside the politics to work on policy during the next Congressional session.

Two weeks after the elections, President Obama's executive order to relax the deportation rules for millions of immigrants was the first sign that the next two years will be much like the last 10.

If elections have consequences, the November mid-terms will affect Senate Democrats and the White House the most. The winners are Republicans in both chambers who will find it easier to push their agenda.

But the question you should ask is: will that result in positive things for the HVACR industry?

When Congress opens the 114th Session in January, we'll see many new faces on Capitol Hill and a big shift in priorities.

The next two years look good for the legislative interests of the small business contractors of the HVACR industry.

The policy battles going forward will be fought between the Republican controlled House and Senate and the White House. Since they can't control the agenda and they may not have the votes to stop legislation, House and Senate Democrats will be marginalized.

You can expect to see the Speaker of the House and the Senate Majority Leader negotiating directly with the White House on bills they want to see become law.

Republicans now hold the largest majority in the House since the Great Depression. You would think this gives House Speaker Boehner more leeway in controlling the divergent members of the Republican Caucus. The tea party members who opposed him over the last two years will be offset by the re-emergence of the so-called Main Street moderate Republicans from New York, New Hampshire, Maine and Iowa.

On the Senate side, Democrats lost their majority when at least eight seats switched parties. Senator Mitch McConnell can count on at least 54 Republicans to vote his way. And depending on the issue, Senator McConnell may find a few moderate Democrats willing to work with him. If he's able to cobble together 60 votes, he can overcome a filibuster.

Over the next two years, House and Senate Republicans will be able to pass out several major policy initiatives that went nowhere under Majority Leader Harry Reid. These include bills to approve the Keystone XL Pipeline, restrict the ability of the EPA to regulate carbon dioxide emissions from power plants, and restrict the White House from using the regulatory agencies to enact its agenda. All of these will fly through Congress on their way to the President's desk, at which point you can expect them all to be vetoed. So it will seem like we are back to square one with gridlock.

But there are ways around the veto threat. One of the first tests for the Republican majority will be adopting a budget resolution for fiscal year 2016. This is not the same as the annual appropriations; it is more of an internal Congressional document that sets spending allowances for Congress and expected tax revenues. A budget resolution does not require the President's signature or any cooperation or compromise with the Obama Administration. But it's a way to tackle things like comprehensive tax reform or major changes to health care policy without worrying about a filibuster. The budget resolution process is how the Democrats passed the Affordable Care Act through the Senate in 2010.

If Republicans set up a budget reconciliation process to deal with issues like tax reform, entitlement reform (except for Social Security, which is statutorily excluded from reconciliation), health care and the debt limit, that will mean putting some very controversial cards on the table early in the 114th Congress. Under current law, the debt limit will be met around March 15, 2015. Since at that time the Treasury is expected to be running a surplus due to income tax and estimated tax filing activity, Congress should have until sometime in May or later before it has to act on raising the debt limit.

HVACR contractors would welcome comprehensive tax reform since it could remove the current bias against pass through entities, like S Corps, partnerships and LLCs, that pay a higher tax rate just because of the way they are organized. The good news is there will be a new chair of the House Ways and Means and tax reform is sure to be a top agenda item.

Don't look now but Washington is already talking about the 2016 elections when the White House, the entire House of Representatives and a third of the Senate are up for grabs. Majority Leader Mitch McConnell will have to protect his majority and avoid helping Democrats. Looking ahead, Republicans will be defending 24 of the 34 Senate seats up for election in 2016, including three (Pennsylvania, Wisconsin and Illinois) in states that have voted Democratic in six consecutive presidential elections.

The next two years look good for the legislative interests of the small business contractors of the HVACR industry. Congress will have an assuredly more pro-business agenda, and both chambers will be keeping a close eye on any executive actions in the last two years of the Obama Administration.

But there will be policy battles and stalled bills and accusations of obstructionism. The new Congress hadn't even started yet when Republicans and the White House were fighting over immigration.

Charlie McCrudden is vice president of government affairs for the Air Conditioning Contractors of America. Contact him at [email protected].

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