Senator Barack Obama (D-Illinois) and Senator Joe Biden (D-Delaware) are headed to the White House in January. Democrats have enlarged their control of the Senate and will thus gain an expanded edge on most committees, enhancing their ability to advance President-elect Barack Obama’s priorities.
Senate Agriculture Committee Chairman Tom Harkin ( D-Iowa ) wants capital investments in rural facilities and broadband development to be part of any national economic recovery package party leaders assemble. In the 111th Congress, the Agriculture panel will address legislation to regulate credit derivatives trading, which has been blamed for contributing to the Wall Street collapse. That could become part of a broader regulatory overhaul of the financial system.
Banking Committee leaders are charting an ambitious agenda for next year: nothing less than a complete overhaul of the regulatory structure for the nation’s financial system. Following a meltdown that has frozen credit markets, triggered millions of foreclosures, clobbered retirement savings accounts and wiped out some of the nation’s largest banks, lawmakers in both parties want to rework the regulatory structure in hopes of avoiding a similar crisis in the future . Obama has called for stronger financial regulation, more help for homeowners and increased transparency, proposals the panel is likely to embrace.
The banking committee will exercise vigorous oversight of the new financial rescue law (PL 110-343 ). Originally sold as a plan to allow the Treasury Department to buy up to $700 billion worth of toxic securities weighing down bank balance sheets, it has evolved swiftly as the crisis has worsened. Thus far, lawmakers have mostly stood back as Treasury has gone in new directions. However, with $700 billion in taxpayer funds on the line, members are demanding complete transparency and a kick-start to private-sector lending. If lawmakers suspect the money is being used imprudently or decide the financial industry is abusing the program, Congress could jump in to change the program or restrict further funding.
On a regulatory overhaul, Democrats are likely to push for tighter controls over risk-taking in the markets and greater oversight of exotic financial products, such as credit default swaps. The committee could also consider increased capital requirements for commercial banks, as well as new capital minimums for investment banks and other financial companies.
The Agriculture Committee claims jurisdiction over commodity futures, complicating Banking’s efforts to change broader securities regulation.
The next Congress also must resolve the fate of mortgage giants Fannie Mae and Freddie Mac. Lawmakers will have to decide whether to nationalize the companies, which are currently under government conservatorship, or sell them back to the public. Congress could also return them to a public-private hybrid status. Other potential agenda items include curbing credit card billing practices that Dodd considers unfair.
With an increased Senate majority, Democrats can make more aggressive use of the budget process to advance their agenda. Whether they will do so remains an open question. For the past two years, the annual budget resolution has served more as a policy document than as a framework for major tax and spending legislation. With just a 51-49 edge and defections in their ranks, Democrats could not advance their priorities through the filibuster-proof budget reconciliation process, which allows tax and mandatory spending legislation to pass the Senate by a simple majority vote.
Now Democrats may use the powerful reconciliation process to fast-track portions of Obama’s health care plan and his tax proposals. Other committees would craft the actual legislation, but the budget resolution sets up the process. The rising national debt and soaring annual deficit will make it difficult for the Budget Committee to draft a budget resolution that both advances the Democrats’ spending priorities and keeps their vow to be fiscally responsible.
Republicans want to create a task force of lawmakers and administration officials to produce recommendations addressing entitlement programs and the tax system. Congress would have to vote up or down on the proposals, without amendment — a model based on the military Base Realignment and Closure Commission.
Senator Ted Stevens’ (R-Alaska) felony conviction ends a long partnership between the Senate’s longest-serving Republican and his close friend Senator Daniel Inouye (D-Hawaii) who chairs the Comerce committee. Senator Kay Bailey Hutchison (R) of Texas, who has been serving as top Republican since Stevens was indicted, is expected to continue in that role.
The Senate Commerce Committee is expected to quickly tackle a reauthorization of the Federal Aviation Administration (FAA) . The committee in 2007 approved a four-year FAA bill (S 1300) to modernize the air traffic control system as approved, but the legislation fell victim to partisan sniping and unrelated disputes in the Senate. The FAA’s temporary extension (PL 110-330 ) expires March 31, 2009.
The Senate Energy panel will seek to spur research and development of advanced clean energy technology — especially carbon sequestration, a process to capture and store carbon emissions from coal-fired power plants. Such technology could expand use of abundant cheap coal. Without it, many experts say, a climate change law would make electricity prohibitively expensive. Obama, who hails from a coal-producing state, supports clean-coal research. In his campaign, Obama promised to invest $150 billion over 10 years in new energy technologies, an ambitious plan that may have to be trimmed or postponed in the current economic climate.
Less dependent on a capital infusion is Obama’s proposal to require that 20 percent of the nation’s electricity come from renewable sources . Amid warnings of looming U.S. power shortages, legislation aimed at modernizing the electric grid, building new power infrastructure and strengthening reliability will get close scrutiny from the committee. The Energy panel also has jurisdiction over public lands and national parks, and Democrats hope to move legislation in those areas as well.
The Senate Finance Committee will be ground zero next year as Obama seeks to advance his tax, health care and energy agendas amid a global financial crisis. Key questions include the order in which Democrats seek to move their various priorities, the extent to which the soaring deficit reins in their ambitions and whether they are on the same page as the White House on fiscal policy. Finance Chairman Max Baucus ( D-Mont ana) is somewhat to the right of his party. How he responds to the Obama agenda, and to the wishes of House and Senate Democratic leaders, will be paramount.
The committee will help shape a planned economic stimulus package, which potentially could move this month in a lame-duck session. If not, it will probably be the first order of legislative business in January. Lawmakers are discussing aid to states for Medicaid and possible retirement-related tax breaks — both under Finance’s jurisdiction — in addition to infrastructure spending, expanded food stamps and an extension of unemployment benefits.
Tax policy will be pivotal — and contentious. As in the past, Congress this year provided just a one-year “patch” to keep the alternative minimum tax from reaching millions more taxpayers, so that must be revisited in 2009. In addition, the estate tax, which began a phase-out under the 2001 tax law and will disappear completely in 2010, is due to return to its original form in 2011. Obama wants to freeze it at its 2009 level, with a $3.5 million exemption and a 45 percent rate. Many tax writers want to tackle that issue now, before the full repeal. The estate tax decision will help determine how much money is available for Democrats’ other priorities.
President Bush’s signature 2001 and 2003 tax cuts (PL 107-16, PL 108-27) expire in 2010. Obama says he wants to extend most of those cuts for taxpayers making less than $250,000, and he proposes a range of new targeted tax breaks, such as the elimination of income tax liability for seniors making less than $50,000 a year. Taxpayers making more than $250,000 would face higher rates on wages, capital gains and dividends.
The Finance panel will also be a major player on health care legislation. Among other goals, Obama wants to require big employers to offer health coverage or pay a percentage of their payrolls to fund a national insurance pool. Finance has jurisdiction over Medicare, the giant federal insurance plan for the elderly and disabled, and must deal with the looming exhaustion of its trust fund.
With Obama in the White House, Chairman Edward M. Kennedy, ( D-Mass achusetts) is eager to tackle his career-long goal of expanding health coverage to all Americans. Any legislation will address the plight of some 47 million uninsured Americans. It also is likely to include provisions on Medicare, Medicaid and aspects of the private health market, such as health information technology.
Turning to Homeland Security, two subcommittees — one focused on disaster recovery and another on state and local disaster preparedness — might be dissolved or consolidated. Both were set up in 2007. One committee priority will be drafting a new Department of Homeland Security authorization bill. If Democrats decide to punish Senator Joseph I. Lieberman ( I-Conn ecticut) for backing GOP presidential nominee John McCain, Veterans’ Affairs Chairman Daniel K. Akaka ( D-Hawaii ) will probably replace him at the helm of the Homeland Security and Governmental Affairs Committee.