In January, Republicans will run both houses of Congress — not that anyone is surprised. The Senate takeover was engineered by Mitch McConnell and was largely a campaign waged against Obama, and not about advocating any specific legislative priorities. The good news is that mistrust and disdain between President Obama and congressional Republicans is so low that there is nowhere to go but up. Several issues will likely dominate the debate for the next year or so, after which many Republican senators will be running for president and will have little desire to work with President Obama.
President Obama insists that he will take executive action if the House of Representatives fails to take action on an immigration reform bill passed by the Senate in 2013. Presumptive Senate Majority Leader Mitch McConnell (R-K.Y.) and House Speaker John Boehner (R-Ohio) have warned that President Obama would “poison the well” of bipartisan goodwill if the president invokes authority unilaterally. Senator John Thune (R-S.D.) echoed this sentiment after a lunch with President Obama and Senate leadership:
There was a lot of push-back from our guys. It would make not only passage of immigration reform more difficult but would also spill over to other areas of the agenda.”
It is unlikely that Congress will agree on a legislative solution, but it would be a mistake for House and Senate Republicans to allow executive action on immigration reform to prevent reform in other policy areas.
There is widespread evidence that the electorate widely supports increasing the minimum wage. Minimum wage ballot initiatives passed in five states that saw Republican victories: South Dakota, Illinois, Arkansas, Alaska and Nebraska. A Baltimore Sun column accurately points out that no one has lost an election by raising the minimum wage. But Republicans are sincere in their view, shared by conservative economists and at least one CBO report, that raising the minimum wage stifles economic growth. While it’s true that no one has lost by advocating this cause, it is unclear whether anyone has lost an election by opposing an increase in the minimum wage. It is unlikely that there will be any legislative action on minimum wage.
The so-called “Asia pivot” was a key tenet of President Obama’s foreign policy in his first term. While events in Eastern Europe and the Middle East have diverted attention and resources, the president remains committed to implementing the Trans-Pacific Partnership, which will increase the market for American goods in eleven Asia-Pacific countries.
The negotiations between U.S. and Japan have been threatened because Tokyo will not make concessions so long as President Obama lacks congressional authority to fast-track approval of the deal. Senate Republicans will likely be far more sympathetic to President Obama’s trade agenda than Senate Democrats and, thus, more likely to grant the authority the president needs to effectively negotiate.
There is little hope for bipartisan agreement on individual tax reform, but President Obama and Senate Republicans are not that far away on corporate tax reform. President Obama favors a 28 percent corporate tax rate while Senate Republicans favor a 25 percent corporate tax rate. It seems that a compromise could be easily reached.
There are disagreements about how the government should tax foreign profits, but this should be outweighed by widespread concern about so-called “corporate inversions,” the practice of U.S. companies shifting its domiciles from overseas to remove future foreign profits from U.S. tax liability.
Republicans and Democrats should, for the sake of reform in the name of protecting future tax revenue from corporate inversions, agree on a revenue neutral reform bill that reduces corporate tax rates, closes loopholes, rearranges taxation on foreign profits, and reduces the attractiveness of corporate inversions to large U.S. companies.
Everyone seems to agree that our national infrastructure is lagging behind our national growth. Even in one of the least productive sessions in history, Congress was able to pass a water infrastructure bill. Currently, highway projects are funded by legislation that expires on May 31. The Highway Trust Fund, which directs gas tax revenues to highway projects, faces solvency issues as its buying power continues to dwindle. The political problem is that any meaningful Highway Trust Fund reform will require revenue enhancement. President Obama proposes utilizing revenues derived from corporate tax reform to complete infrastructure projects.
One of the first actions of the new Congress will likely be a vote to repeal the Affordable Care Act. After this vote, Congress and President Obama could target narrow modifications to some of the law’s more unpopular provisions: the tax on medical devices and the requirement that employers provide health insurance to every employee who works 30 hours per week. President Obama has indicated an openness to revisiting certain aspects of the law, but not the controversial individual mandate.
Any hope of substantial legislative achievement would require us to suspend our disbelief in the possibility of a spirit of bipartisan ship. The fact of the matter is that we live in a hyper-partisan political culture that rewards manufactured outrage over progress of any kind. In any event, if both parties recognize that there is a long-term political incentive to cooperate in some fashion, the following is the best we can hope for: