Government Affairs

News of the week ...

On Tuesday, November 7th, the U.S. House of Representatives passed H.R. 3441 the Save Local Business Act by roll call vote of 242-181. We are extremely pleased that the bill passed with strong bipartisan support and in a timely manner. 

The bill amends the National Labor Relations Act and the Fair Labor Standards Act of 1938 to provide that a person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately (and not in a limited or indirect manner), exercises significant control over the essential terms and conditions of employment (including hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, and administering employee discipline). 

The joint employer issue is a concern to KFC franchisees because if the new standard is taken to its logical conclusion, franchisors such as KFC might determine that they will be liable no matter what happens, and as a result, decide to exercise even more control over the day to day operations of your independently owned and operated businesses. It also would have the likely effect of making disgruntled employees potentially more likely to sue, as they may now believe they would have the deep pocket of the franchisor to chase, and not just the small business owner that actually employed them.

The GAC and federal team are working with a few coalitions and groups in Washington, DC to get a Senate companion introduced with the hope of being signed into law next year.

Some Articles of Interest ...

Legal Update: Trump’s One-offs to Labor Regulations Change the Big Picture

When Trump was a brand-new President (or force of nature, depending on how you look at it), we observed that the dawn of his administration would not necessarily augur wholesale changes to the overall landscape of legal concerns for employers.  Why?  Because, as with so many things in Trumpworld, there didn’t appear to be a coherent labor policy, or (given the inexperience of some of his closes team members) even policy competence.

In fairness, however, marauding Huns didn’t have to be particularly artful or finessed about the way they sacked whole cities, right?  In a transformative conquest, a blunt hammer probably works as well as a rapier with pinpoint accuracy.

And so it is with Trump.  With just about eight months of activity, we have seen the Presidential administration do what Trump is best at:  take direct aim at what Obama did and do the opposite.  Incremental changes to labor and employment law and regulation under Trump (and some related developments in the courts) have, one by one, almost entirely reversed course on many of the pet labor and employment initiatives the Obama administration championed, among them:

  • Limitations on class action waivers, which made it more difficult for large groups of plaintiffs to sue companies.
  • “Joint employer” standards that gave labor unions ammunition to argue that multiple franchisees (think McDonald’s), which in the past were treated as separate employers, are in fact joint employers.  Those standards, now reversed, gave unions one big fish for organizing instead of many little ones.
  • A DOL focus on policing the misclassification of employees as independent contractors by employers—a move sometimes made by employers to reduce tax and employee benefits liabilities.
  • Limitations on OSHA drug testing rules covering employees.
  • “Blacklisting” regulations that would require federal contractors to publish claims brought against them alleging labor and employment law violations.
  • Providing additional fiscal resources to the EEOC and OFCCP, instead merging these employment-related agencies into a single entity.
  • Expansions of the so-called “persuader rule,” which required employers to disclose paid relationships with individuals or firms helping employers fight union organizing campaigns.
  • New FLSA overtime regulations, which would have raised the “salary threshold” under which overtime must always be paid and expanded overtime pay entitlement to as many as four million American workers.
  • A National Labor Relations Board stocked with progressives who increased burdens on employers and decreased burdens on unions, in favor of an NLRB much more likely to roll back Obama-era changes.

DOJ Changes Position on Class Action Waivers:  The Obama Department of Justice consistently argued against the enforceability of class action waivers in arbitration agreements, arguing that the waivers hurt consumers and individual claimants.  The Trump DOL has now reversed course:  in a Supreme Court amicus brief filed by the DOJ on June 16, 2017 in Ernst & Young LLP v. MorrisNLRB v. Murphy Oil USA Inc. and Epic Systems Corp. v. Lewis (Case Nos. 16-285, 16-300, 16-307), the DOJ was candid:  “[i]n Murphy Oil, this Office previously filed a petition for a writ of certiorari on behalf of the NLRB, defending the Board’s view that agreements of the sort at issue here are unenforceable.  After the change in administration, the Office reconsidered the issue and has reached the opposite conclusion.” Now, the Trump DOJ contends, enforcement of the parties’ arbitration agreements in accordance with the Federal Arbitration Act, including ones containing broad class action waivers, do not deprive claimants of any substantive rights conferred by other federal statutes.

This is potentially good news for companies and employers who use arbitration agreements to limit the expansive and expensive risks associated with large class actions.  But it may not be that simple:  in the later years of the Obama administration, the Supreme Court has objected to regulators taking sharp U-turns.  In one case, Kiobel v. Royal Dutch Petroleum, the late Justice Antonin Scalia grilled Solicitor General Donald B. Verrilli Jr.: “Why should we listen to you rather than the solicitors general who took the opposite position?” he asked.  “Why should we defer to the views of the current administration?”  The answer remains to be seen.

Labor Secretary Withdraws Pro-Employee Agency Guidance:  In a June 7, 2017 news release, U.S. Department of Labor Secretary Acosta, announced the agency’s withdrawal of its 2015 and 2016 guidance on “joint employment” and independent contractors.  During the Obama administration, agencies like the National Labor Relations Board had expanded potential employer liability by grouping individual employers as a “single employer,” a move having particular impact on the ease with which labor unions could organize franchises like fast food restaurants.  Similarly, the Obama administration tightened regulation and enforcement of employer misclassifications of employees as independent contractors, which released many employers from tax and benefits obligations owed to employees.

According to the DOL release, “[r]emoval of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law.”  The release further noted that “[t]he department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.”  That said, the aim of the DOL pullback is clear:  two progressive Obama-era polices are no longer on the agenda at DOL.

DOL Rescission of Rule Limiting Drug Test Mandates for Unemployment Benefits:  In March 2017, President Trump signed legislation which quashed a U.S. Department of Labor rule which provided narrow limits for the circumstances under which drug testing could be administered by states in connection with unemployment insurance systems.  The President’s actions undid a rule finalized in August 2016 under the previous administration which narrowly defined the circumstances in which drug tests could be conducted.  The final rule was published in the Federal Register on May 11, 2017.  82 Fed. Reg. 21,916 (May 11, 2017).  The impetus of the Obama rule, now disregarded by Trump, was in part the current opioid epidemic in the U.S., since as much of one quarter of the labor force in some Midwestern cities may test positive for opioid use.

Longer-term OSHA Reporting Rule Curtailed:  In April 2017, President Trump signed a Congressional Review Act authorization rolling back OSHA’s “Clarification of Employer’s Continuing Obligation to Make and Maintain an Accurate Record of Each Recordable Injury and Illness” final rule.  Known as the “Volks Rule,” the rule would have helped OSHA to issue recordkeeping violations for a longer look-back period.  The withdrawal of the regulation was finalized in the Federal Register on May 3, 2017.  82 Fed. Reg. 20,548 (May 3, 2017).

Repeal of “Blacklisting Rule” Impacting Federal Contractors:  On March 27, 2017, President Trump signed a Congressional Review Act resolution which invalidated the Fair Pay and Safe Workplaces Act, which required, among other things, that federal contractors and subcontractors disclose labor law violations under a number of laws to the federal government in order to bid on government work.

Proposed Merger of EEOC and OFCCP:  In its proposed budget for 2018, released on May 23, 2017, the White House proposed merging the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance Programs in order to “creat[e] one agency to combat employment discrimination.”  The budget further provided that “OFCCP and EEOC will work collaboratively to coordinate this transition to the EEOC by the end of FY 2018…The transition of OFCCP and integration of these two agencies will reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement.” Although the proposal, on its face, promotes agency efficiency, the move has been criticized as a way of limiting the resources and reach of two traditionally separate agency functions—one policing equal employment opportunity laws, and the other promoting diversity and nondiscrimination in workforces.

Status of “Persuader Rule”:  On November 16, 2016, the U.S. District Court for the Northern District of Texas issued a nationwide permanent injunction against DOL revisions to the so-called “persuader rule.” That rule would have required law firms providing strategic advice to companies facing union organizing drives to disclose their clients and their fees in connection with such activities, far expanding the rule beyond its original coverage of hired “persuaders” posing as employees.  On June 2, 2017, the Department of Labor requested that the Fifth Circuit place the currently pending appeal on hold by way of a filing with the court.  On June 15, 2017, the Fifth Circuit issued an order placing the appeal in abeyance pending the Department of Labor’s rulemaking process, or until December 12, 2017.  Natl. Federation of Indep. Bus., et al. v. R. Acosta, Secretary LABR, et al., No.: 17-10054 (5th Cir. June 15, 2017).

DOL Overtime Rule Struck Down by Federal Judge in Texas on August 31, 2017:  On August 31, 2017, District Court Judge Mazzant granted summary judgment to the Plano Chamber of Commerce and more than 55 Texas and national business groups, concluding that an Obama administration extending overtime to an additional four million U.S. workers.  The decision effectively bars the overtime rule.  State of Nevada et al. v. U.S. Department of Labor et al., No.: 4:16-cv-00731 (E. D. Tex.).

New Republican NLRB Could Tip the Scales:  During the summer of 2017, the White House announced Marvin Kaplan and William Emanuel as nominees for the two vacant NLRB seats. Marvin Kaplan was subsequently sworn in in early August 2017. In the event the second nominee is confirmed, the Republicans will regain the majority on the 5-person board. Should this occur, there is potential that the board will significantly reverse the work of the prior presidential administration. Specifically, at risk for unraveling by the new board is the Browning-Ferris ruling which substantially broadened the joint-employer doctrine utilized by the labor board. The 2015 Browning-Ferris decision allowed for “indirect control” or reserved control to establish joint employment, in contrast to the previous requirement that the employers exercise the authority to control terms and conditions of employment. 362 NLRB No. 186 (2015). In addition, potential exists for NLRB decisions to be reconsidered related to the ability of graduate students to organize and the ability of small groups of workers to form unions (“micro-units”).

These and other changes keep rolling in almost daily, and we’ll be keeping our readers updated, so check back with us as the transformation of labor and employment regulation under Trump picks up speed.

RFS comments to EPA include pros and cons

  • Sep 9, 2017 

Editor’s note: The comment period on EPA’s “Renewable Fuel Standard Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019” ended Aug. 31.

The rulemaking docket shows the proposal drew 1,234 comments and 148 supporting documents. Following are portions of comments and documents. The docket is at

National Corn Growers Association

Keith Alverson, Chester, S.D.

My local ethanol plant was constructed one year prior to my college graduation. That plant, and the economic opportunity it created, is a large part of what enabled me, as well as other young farmers, to return to the farm. Likewise, childhood friends and relatives found good jobs at our ethanol plant, enabling them to stay at home and help our rural community grow. …

While NCGA supports the proposal for conventional biofuel, we are concerned that EPA reduced the total volume by 40 million gallons – and the cellulosic volume by 73 million gallons – compared with final 2017 levels.

As EPA noted in the proposed rule, many ethanol producers are investing in new technologies to produce cellulosic ethanol at existing facilities. NCGA urges EPA to work with producers to fully quantify this production and consider all 2017 cellulosic data.

It’s not only corn stover that can produce fuels with greater [greenhouse gas] benefits. For example, we have documented substantial carbon sequestration on our farm through ongoing soil testing. Our data translates to an 85 percent GHG reduction for ethanol compared to gasoline.

American Soybean Association

Soybean farmers nationwide urge EPA to increase the volumes for biomass-based diesel to at least 2.75 billion gallons for 2019 and to increase total advanced biofuels volumes to 5.25 billion gallons in 2018. …

While biodiesel is now made from a diverse and growing volume of feedstocks, soybean oil remains the largest source of biodiesel feedstock. …

Biodiesel also provides additional economic, energy, and environmental benefits, such as increasing volumes of domestically produced, renewable energy while providing significant reductions in greenhouse gas emissions resulting in improved air quality. …

Soybean oil has been displaced from domestic food markets as a result of the FDA determination requiring the elimination of all partially hydrogenated oil, which creates trans-fat. Since the trans-fat labeling requirements were announced in 2003, approximately four billion pounds of annual soy oil use has been displaced from the food market.

The market outlet that biodiesel provides for soybean oil also benefits livestock production by improving the margins for soybean processing and lowering the cost of soy meal used for livestock feed.

Energy Resources Center

University of Illinois at Chicago

Steffen Mueller, Ph.D.            

Of concern to us is the fact that the RFS is based on outdated life cycle methodology and the outdated modeling runs are still widely posted throughout the EPA websites. In fact, the outdated modeling exercises have been superseded by much newer and very comprehensive analyses conducted by other U.S. government entities including the USDA and the U.S. Department of Energy. …

EPA’s outdated RFS modeling runs have had direct negative impact in the recent past as foreign countries look at importing U.S. produced corn ethanol. Brazil cited the outdated greenhouse gas modeling runs in that country’s development of import barriers against U.S. produced corn ethanol. Other countries likewise cite these modeling runs in their evaluations of U.S. produced corn ethanol for consideration as blending additive into their fuel supply.

Therefore, we urge the EPA to update the life cycle modeling runs for biofuels including corn ethanol.

C. W. Martin

I am an American rancher/beef producer and am much in favor of expanding the amount of ethanol/biofuels that could be available to the public. Considering the valuable positive economic impact to our American farmer, it is imperative that we support, and hopefully increase, our corn growers’ bottom line.

It may seem paradoxical that I as a beef producer want to see higher prices for feedstuffs, especially corn, which is the main driver of all other commodities, since that means a higher cost of inputs for me to finish beef for harvest. The fact is this, the total American agricultural economy must achieve a higher plateau of prices, or our national pride and priority of bountiful food production will be severely harmed because of the negative return to our ranchers and farmers.

Anonymous public comments:

… I’m just a homeowner with a sputtering mower in the shed and two snow throwers in the shop awaiting expensive repairs due to E10 phase separation.

I don’t know what to expect in the long term for my boat engines, but they definitely consume more fuel than before, and that’s while operating at lower RPM. As for my vehicles, they all get lower MPG and reduced power/torque. …

This whole corn lobby driven program is, and always has been, headed down the wrong road, inflating the cost of all sorts of foods and reducing the amount available for consumption, both domestically and for the export markets, driving up expenses across the board, consuming more energy to produce than it has the thermal potential to provide …

• • •

Any mandate of ethanol in gasoline is support for the worst kind of crony capitalism. It creates distortions of the market, causing corn to be grown for the benefits of the farmer, costing the consumer in higher fuel costs, lower fuel efficiency and higher grocery prices. It is wrong economically and from an environmental standpoint!

Don’t do it.

• • •

As a recreational boat owner, I urge the EPA to carefully review the consequences of the proposed Renewable Volume Obligations for 2018 and their effect on the supply of fuel that is safe to use in my boat. I am deeply concerned the proposed mandated ethanol volumes will make it more difficult for me to find fuel that is safe and legal to use in my boat’s engine. …

I am also very troubled that not enough has been done to prevent the mis-fueling of my boat with the higher ethanol blends. The mis-fueling mitigation plans currently available, essentially only one sticker on fuel pumps dispensing E15, are totally inadequate protection against my inadvertently using the wrong gasoline in my boat. …

This whole issue is a politician’s answer to propping up corn farmers with a fuel that gets worse mileage, is more expensive and results in virtually no improvement in air quality.

Tax Plans Must Not Lose Revenue and Should Focus on Raising Working-Class Incomes






Congress is expected to consider a 2018 budget resolution this fall that will set the rules for subsequent tax legislation by establishing the revenue targets that a tax bill must meet to qualify for the fast-track budget “reconciliation” process.  At a minimum, the resolution should require that a tax bill be “revenue-neutral,” meaning that the bill must fully offset the cost of any tax cuts by closing tax loopholes, scaling back exclusions and deductions, or enacting other revenue-raising provisions.  A REVENUE-LOSING TAX BILL WOULD WORSEN THE NATION’S LONG-TERM FISCAL OUTLOOK.That’s because a revenue-losing tax bill would worsen the nation’s long-term fiscal outlook and likely put key budget programs for low- and moderate-income Americans at risk, now or in the future.  Beyond revenue neutrality, a tax bill should focus its benefits on low- and moderate-income working families because working-class wages have largely stagnated in recent decades, making a middle-class life harder for many to reach and maintain.

Congress should reject any budget resolution that would let lawmakers finance tax cuts, which almost certainly would disproportionately benefit the most well-off, with budget cuts, which would very likely come in large part from core assistance programs for low-income Americans, such as Medicaid, SNAP (food stamps), and Supplemental Security Income (SSI) for the elderly and disabled poor.  Congress should also reject any resolution that paves the way for tax cuts that swell budget deficits.  That would leave us with debt levels that are rising higher as a share of the economy, which would weaken the economy over time and could prompt policymakers down the road to enact large budget cuts to offset the cost of tax cuts.  That, too, could mean large cuts to core assistance programs as well as to Medicare and to non-defense discretionary spending — the budget category that funds such key priorities as education, research, and infrastructure.

Unfortunately, recent tax and budget proposals from President Trump and congressional Republican leaders move in the wrong direction.  They feature large tax cuts tilted to the most well-off without specific tax policies to fully offset the cost, alongside cuts to health coverage, nutrition assistance, education, and other priorities that are important to tens of millions of Americans.  These budget cuts would fall mainly on low- and middle-income households, leaving them worse off while enriching the most well-off. 

Revenue Neutrality Is Minimum Fiscal Requirement

The federal tax system should provide adequate revenue to finance national priorities and avoid spiraling long-run debt and interest burdens.  With an aging population and rising health care costs pushing up costs for Social Security, Medicare, and Medicaid, and with national security challenges continuing, simply paying for existing federal commitments will require more revenues in the future — and that won’t even cover the cost of needed additional investment in areas such as infrastructure and job training to strengthen prospects for long-term economic growth, help produce rising living standards, and foster more opportunity.[1]  (See Figure 1.) 


Ideally, then, any major tax bill should raise revenues, as virtually all bipartisan deficit-reduction commissions of recent years have urged.  At a minimum, it should not lose revenue.   To be sure, House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and other key Republicans have said at various times this year that tax legislation will be revenue-neutral.[2]  But, with the House and Senate likely to consider a fiscal year 2018 budget resolution this fall, the question is whether GOP leaders will follow through. 

The issue will come to a head in the coming weeks.  Republican leaders say they plan to use the budget reconciliation process to pass tax legislation in the months ahead. Reconciliation bills can pass the Senate with a simple majority — that is, with only Republican votes. But to use reconciliation, Congress must first approve a budget resolution that creates a “reconciliation instruction” for tax legislation, setting out deficit or revenue targets for the legislation over the budget period.

Any reconciliation instruction for tax legislation should require that it be revenue-neutral.  And Congress should both enforce revenue neutrality and measure it honestly.  That means:

  1. Measuring revenue neutrality against a “current-law” baseline.  Some Republican lawmakers are reportedly considering using a “current-policy” baseline to evaluate tax policy changes, instead of the standard “current-law” baseline.  That would constitute a large budget gimmick, paving the way for $439 billion in unfinanced tax cuts over ten years.  That figure is the cost of extending through the next decade the dozens of “temporary” corporate and individual tax breaks that have recently expired or are scheduled to expire in the coming years under current law.  Unlike the current-lawbaseline, which assumes that current law will be honored and hence that these time-limited tax breaks will expire on schedule, a current-policy baseline assumes that these measures will remain in effect despite their scheduled expiration.  Thus, under a current-policy baseline, proposals to extend these tax breaks are portrayed as having no cost.  And proposals to let these tax breaks expire on schedule are treated as raising new revenue that lawmakers could then use to “pay for” new tax cuts.[3]   
  2. Using standard Joint Committee on Taxation (JCT) scoring.  The non-partisan JCT should estimate the impacts of any tax legislation, using its traditional revenue estimates rather than estimates altered by “dynamic scoring.”  Dynamic scoring incorporates highly uncertain estimates of the supposed impact of tax policy changes on future economic growth.  Given the country’s fiscal pressures and the high degree of uncertainty surrounding dynamic scoring, lawmakers should not use it to try to make the cost of a tax-cut bill appear smaller.[4]
  3. Avoiding other gimmicks.  Lawmakers also shouldn’t use other gimmicks to hide the cost of tax cuts, such as by making them temporary (for, say, ten years) even though policymakers fully intend to make them permanent later, or by using timing shifts (in, for instance, the tax treatment of retirement accounts) in order to accelerate revenue from future decades into the coming decade and thereby make a tax cut appear less costly than it will be over the long run.[5]

Revenue-Losing Tax Bill Would Put Key Programs at Risk, Now or in Future

Congress may be tempted to adopt a budget resolution that allows a tax reconciliation bill to be “deficit-neutral” rather than “revenue-neutral.”  That would allow revenue-losing tax proposals to be financed by cuts in entitlement programs.  Since entitlements mainly benefit middle- and lower-income families while the GOP tax-cut proposals unveiled to date heavily favor high-income households and large corporations, legislation that finances large tax cuts with big entitlement cuts would represent a Robin Hood-in-reverse measure.[6]

Congress also may be tempted to permit, through the budget resolution, revenue-losing tax legislation, which would increase budget deficits.  That, however, would likely only kick the budget cuts down the road, as policymakers must pay for tax cuts sooner or later.  Here, too, low- and middle-income families would likely end up worse off once lawmakers cut programs that help families afford basic needs and domestic investments that can strengthen long-term economic growth.  Medicare and Medicaid would be particularly vulnerable to future budget cuts, given their substantial cost and share of non-defense spending. [7]  In addition, if a revenue-losing tax cut significantly worsened the outlook for deficits and debt, those who favor substantial cuts in Social Security would likely cite that as a justification.

The Tax Policy Center (TPC) recently analyzed the most recent Trump tax proposal’s net effect on households across the income distribution, offering three hypothetical ways of paying for its tax cuts.  Under the financing option most closely reflecting the budget priorities of the Administration and Republican Congress, virtually every household in the bottom two-fifths of the income spectrum — those earning below $48,600 a year — would lose more than it gained, losing an average of more than $2,000 a year in after-tax income once the offsetting budget cuts are taken into account.[8]  Most households in the middle fifth — those earning between $48,600 and $86,100 — would also be net losers, losing an average of $1,500.  (See Figure 2.)


To minimize threats to programs that help people afford basic needs, including Medicare and Social Security — and to restore some of the recent cuts in defense and non-defense discretionary spending while leaving room for needed initiatives — tax legislation should raise revenue, and certainly not lose it. 

Tax Policy Changes Should Focus Help on Working Families

While establishing how tax legislation can affect the budget, the budget resolution will not delineate the specific tax changes that Congress should adopt.  When that phase of the debate begins, policymakers should concentrate on tax policies that aid low- and moderate-income working families — a racially, ethnically, and geographically diverse group that has been hit hard by the economic trends of recent decades.[9]

Executive pay, corporate profits, and stock-market values have all risen in recent decades, while working-class wages have largely stagnated and a middle-class life has become harder for many to reach and sustain.  (See Figure 3.)[10]  Income inequality has grown substantially in recent decades, and a tax bill that could reallocate trillions of dollars of income over the next decade should take that into account.


President Trump has frequently alluded to a central economic challenge — to boost the incomes of working-class people.  “These are the forgotten men and women of America,” he said while running for President.  “People who work hard but don’t have a voice. . . .  Too many of our leaders have forgotten that it’s their duty to protect the jobs, wages and well-being of American workers before any other consideration.”[11]  In his inaugural address, he vowed to make “every decision” on taxes “to benefit American workers and American families.”[12]

Similarly, Treasury Secretary Steven Mnuchin promised in February that “any reductions we have in upper-income taxes will be offset by less deductions, so there will be no absolute tax cut for the upper class.”[13]  That standard, sometimes called the “Mnuchin rule,” recognizes that there is no need to cut the taxes of hedge fund managers, corporate CEOs, and the like whose incomes have risen sharply in recent decades.  Any tax legislation should adhere to it.

A major tax package should respond to stagnant working-class wages and rising inequality — and so reflect the statements of the President and Secretary Mnuchin.  Unfortunately, the specific tax policies that the Administration has unveiled and the “Better Way” tax plan that House Republicans issued in 2016 have strayed far from these goals.[14]  So do the GOP bills to “repeal and replace” the Affordable Care Act.[15]

The House GOP “Better Way” plan was tilted so heavily to the highest-income people that TPC estimated that by 2025, an overwhelming 96 percent of its tax cuts would go to households with incomes above $1 million.  Those households would receive annual tax cuts averaging $302,000 by that year, boosting their after-tax incomes by more than 11 percent, TPC estimated (see Figure 4).[16]  (The “Better Way” plan also is far from revenue-neutral, losing $3.1 trillion over ten years, according to TPC.)

 The Trump tax plan is even more expensive and also highly regressive, TPC found.[17]  It would give the largest tax cuts (both in dollars and as a share of their income) to people making over $1 million a year, while doing little for most working- and middle-class families.



Given stagnant wages for many workers, soaring incomes for those at the top, and strong corporate profits — as well as future fiscal pressures stemming from the aging of the population and rising health care costs — tax reform should adhere to these core principles:  strict revenue neutrality, no net tax cuts for the most well-to-do, and a focus on ordinary working families.  The rhetoric of President Trump, senior Administration officials, and Republican congressional leaders has often reflected these principles.  But their proposals to date have run in the opposite direction.

The upcoming debate over the budget resolution will show whether Republicans intend to shift their policies to match their rhetoric. A tax reconciliation instruction that is revenue-neutral, as Republican leaders have promised, would ensure that tax legislation does not create pressure for cuts to programs that help families meet basic needs or that can strengthen the economy over time.  But if Congress instead fast-tracks a tax package that either adds to the deficit or is financed with cuts to programs that help families afford basic needs, that will leave the most well-to-do even better off and most others holding the bag.

GOP struggles to control its own agenda

The next six months are full of hazards for Republicans — largely created by Trump.

09/09/2017 07:33 AM EDT

President Donald Trump’s flirtations with Democrats and fixation on divisive campaign promises have paved the way for hazardous, rolling deadlines over the next six months on spending, the debt ceiling and immigration.

The debt and spending bill approved by Capitol Hill on Friday averted imminent fiscal disaster, but it’s added more misery for a Republican Party whose agenda has floundered even with unified control of Washington for the first time in a decade. It’s also given Democrats significant leverage to imperil tax reform, the GOP’s best hope at a major legislative victory.

Rather than dictating the agenda of Capitol Hill, Republican lawmakers oftentimes find themselves at the whims of a capricious White House, Democrats in the minority and a calendar that’s getting increasingly packed ahead of campaign season next spring.

Speaker Paul Ryan (R-Wis.) predictedin January that tax reform, Obamacare repeal and a border wall would all be done by now. Instead, Obamacare repeal may be completely dead at month’s end, there are just broad strokes on tax reform, and many Republicans oppose the border wall being pushed by their own president.

Now GOP lawmakers across the party’s ideological spectrum are agonizing about the party’s stark lack of achievements after getting rolled by Democrats in debt ceiling negotiations this week.

“If we get to December and we’ve not repealed and replaced Obamacare, we've not built the wall, we've not done tax reform, let me just tell you it is not going to be pretty,” said House Freedom Caucus Chairman Mark Meadows (R-N.C.).

“I’m extremely worried,” said Sen. Joni Ernst (R-Iowa), an ally of Senate Majority Leader Mitch McConnell (R-Ky.), who’s urging him to cancel an October recess to get more accomplished. “My gosh, why were we not here in August doing all of this?”


The crush of deadlines and internal GOP feuds only begins to describe the obstacles facing Republicans this fall. The most immediate decision is whether to revisit the painful health care debate that seemingly ended when Sen. John McCain (R-Ariz.) voted down a repeal bill in July. The Senate parliamentarian recently ruled that the GOP loses its powerful party-line repeal powers to dismantle the 2010 health care law after Sept. 30.

The quick passage this week of the deal brokered by Trump and Democratic leaders to provide Hurricane Harvey relief, fund the government and lift the debt ceiling into December could open a hole in the Senate’s schedule in late September to take one more shot at Obamacare, depending on how quickly the chamber can pass a defense policy bill this month.

No health care plan seems likely to get 50 votes, but there is immense pressure from the White House and its congressional allies for the Senate to try again — a battle beleaguered GOP leaders are wary of fighting again.

And for all the talk about tax reform, the GOP is nowhere close to passing a budget resolution for the next fiscal year — a critical step to unlocking procedural tools to allow Republicans to avoid a Democratic filibuster in the Senate.

The GOP leadership is considering bringing a budget to the Senate floor in the first week of October, according to Republican sources. But drafting a fleshed-out fiscal blueprint with policy details, rather than a “shell” resolution that Republicans did last year for Obamacare repeal, may also prompt internal GOP battles over spending priorities.

“This budget process is broken,” said Sen. David Perdue (R-Ga.), who is close to Trump. “I’ve been screaming about it for two years.”

House Ways and Means Committee Chairman Kevin Brady, the House’s point man on tax reform, said there’s still no time frame for the budget to pass or for lawmakers to release substantive details of a tax reform package.

“I don’t know what that schedule is,” the Texas Republican said. He added, "We’re just focused on delivering [tax reform] to the president’s desk by the end of the year.”

Democrats, high on their victory this week with the fiscal deal, hope to build on their momentum and throw another wrench into the Republicans’ ambitious agenda, particularly on tax reform. They believe the pressure of the new December deadline will make it difficult for the GOP to juggle both a spending bill and a partisan tax code rewrite.

“I certainly hope it makes it more difficult to carry out an agenda of trickle-down economics,” House Minority Leader Nancy Pelosi (D-Calif.) said of the internecine GOP fight in a conference call with reporters on Friday.

Still, Republicans remain outwardly optimistic for a tax overhaul’s prospects, viewing it as a political imperative for the party after the GOP crashed and burned on its push to dismantle Obamacare. Ryan has vowed to complete a tax overhaul by the end of the year, and other Republicans also view Dec. 31 as a drop-dead date.

Without action on tax reform, Republicans risk ending the year 0 for 2 on their major priorities, potentially presaging a difficult midterm campaign next year.

“It’s just going to be more difficult to have a spending debate in three months. We ought to do a longer-term [spending stopgap]. That’s my biggest concern,” said Sen. Rob Portman (R-Ohio). “We can still get [tax reform] done, though. Let me say that definitively.”

Trump administration officials have also insisted that the three-month fiscal deal, which set up a massive year-end deadline in Congress, actually cleared the decks for doing tax reform — comments that puzzled some Republicans.

“I’m not quite sure what they mean,” said Sen. Mike Crapo (R-Idaho).

“I don’t like to see the big train wreck in December,” said Sen. John Thune (R-S.D.). “I like to clear everything so we don’t have everything hitting at the same time. My preference was to have a longer deal on the debt ceiling.”

Republicans are now hoping the Treasury Department’s practice of extending the government’s borrowing capacity through “extraordinary measures” will give them at least until early next year before another painful debt ceiling vote. But that is uncertain and based on tax revenues and macroeconomic factors out of Congress’ hands.

Complicating matters further is how to address hundreds of thousands of young undocumented immigrants whose future in the United States was thrown into question when Trump announced that he would end the Deferred Action for Childhood Arrivals program. Work permits and deportation protections for so-called Dreamers will begin to expire in early March unless Congress codifies the Obama-era executive action into law. That’s another cliff Republicans had not previously anticipated.

Democrats want to pass legislation creating a pathway to citizenship for Dreamers as soon as possible, and believe the year-end deadlines give their party significant leverage on immigration. But Republicans are pumping the brakes, insisting that tax reform has to come before immigration fixes.

“Regardless of the six-month deadline, I think [for] people on our side of the aisle, tax reform is the thing that has to be dealt with first,” said Sen. Bob Corker (R-Tenn.).

Republicans started the year aiming to ram through Trump’s Cabinet, his Supreme Court nominee, Obamacare repeal and tax reform all along mostly party-line votes.

Now there is concern among Republicans that Trump’s growing closeness with Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) could complicate the party’s efforts to move tax reform with only GOP votes.

"Many in the Republican Party are now saying: 'Hey, the president just made a deal with the Democrats. What’s our path forward?'" McCain said.

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