McDonald Hopkins Government Strategies Advisory: This Week in Washington -- August 28, 2015

Senate to take aim at medical device tax

There is bipartisan support for repeal of the medical device tax. Although the House passed its repeal bill in June, hurdles still remain to get the bill across the finish line in the Senate.

When Congress returns in September it appears that the Senate will finally take a stab at it, but it is unclear exactly when a bill will move, with aides saying only that it will happen “before the end of the year.”

It is not just timing that is unclear. The Senate repeal bill is not identical to the House measure, but rather a tax-repeal bill introduced in January by Finance Committee Chairman Orrin Hatch. Sen. Amy Klobuchar of Minnesota is the lead Democrat working on moving the measure forward.

A McConnell spokesman said that a vote on the medical device tax repeal has not been scheduled yet, "but it's something we'd like to get done, of course."

Additional hurdles remain for the bill. First, Democrats opposing repeal would need to muster only 41 votes to successfully block it via filibuster. Further, the White House has said President Barack Obama would likely veto the measure should it arrive on his desk, a move that would require 67 Senate votes to override.

Additionally, there are struggles within each caucus. Republicans have been hesitant to make small-scale changes to the Affordable Care Act, given the party platform of repealing it entirely.

Democrats also have several reasons to oppose a repeal of the tax. First, it would be conceding ground on the law they have avidly defended for the past five years, although many Democrats have openly said the law isn't perfect. Repealing the medical device tax could also open the door for other industries to lobby to change the parts of the law that they don't like.

Finally, there's the issue of repealing a tax without adding to the deficit. Finding such a "pay-for" is tricky for both caucuses. Democrats fear that the GOP could look to cut spending from other parts of the law or from social programming, given the party's antipathy for increased taxes.

Republicans, meanwhile, fear that finding a funding mechanism for the law could create the appearance of funding the law as a whole, a position of considerable political peril.

Looming battle over cybersecurity bill

Majority Leader Mitch McConnell (R-Ky.) had hoped to pass a cybersecurity bill before Congress left for the August recess. The Senate recessed without a vote, but McConnell is promising cybersecurity will finally get an up or down this fall.

The future of the bill may hang on 22 different amendments to the bill that McConnell has agreed to allow when the bill is back on the floor. The 22 amendments – 10 from Republicans, 11 from Democrats, and one from the bill's bipartisan co-sponsors – are the product of intense negotiations aimed at getting the bill out of the upper chamber.

The bill sets up incentives for businesses to share cyber threat information with the government, with the goal of supplying both with the tools and data they need to bolster their defenses. Among the 22 amendments that will be considered are a number that could prove to make final passage easier and a number that could make final passage more difficult.

Some of the amendments to be considered include:

1. An amendment from Sen. Tom Cotton (R-Ark.) that would offer liability protection for sharing with FBI and Secret Service.
   
   CISA would allow businesses to share cyber threat information directly with any federal agency, but offers them liability protection only for sharing with the Department of Homeland Security. Cotton’s amendment takes liability protections a step further and would extend them to companies who want to share with the FBI or Secret Service.
   
   The provision is a useful one for businesses that regularly deal with data breaches, but it is also one of the most worrisome for privacy advocates.


2. A Franken/Leahy/Wyden amendment that would narrow the definitions of cybersecurity threats and indicators.
   
   This amendment, which has the support of civil-liberties groups, would allow companies to share cyber threat information only insofar as it is "necessary to describe or identify" a handful of malicious activities that hackers generally engage in. It would also narrow the definition of cyber threats by requiring that companies only share information about activities "reasonably likely" to result in harm.
   
   But the more restrictive definitions of threats and indicators could be stumbling blocks for businesses that want to participate in the sharing program.


3. An amendment from Sen. Ron Wyden (D-Ore.) that would require companies to remove personal information "to the extent feasible."
   
   The business and civil-liberties communities strongly disagree over whether the current version of CISA would result in individual Americans' personal information being shared with the government inappropriately.
   
   The Wyden amendment would strengthen the requirement that private companies remove sensitive personal information before sharing cyber threat indicators. The amendment would allow companies to include personal information in the data they share only if the information is necessary to identify or describe a threat, and require them to scrub personal data "to the extent feasible."
   
   CISA opponents have targeted this amendment as the most important must-pass change to the bill.
   
   An alternative amendment, being offered by Sen. Dean Heller (R-Nev.) would require companies to remove personal information from cyber threat indicators they share if they "reasonably believe" the information does not relate directly to a threat. While the Heller amendment imposes less stringent restrictions on businesses than the Wyden amendment, it still lacks the "legal certainty” that business groups want.


4. An amendment being offered by Sen. Rand Paul (R-Ky.) would prevent businesses from using CISA liability protections to break user agreements.
   
   Paul's proposal would limit the liability protections extended to businesses so that companies would remain bound to the privacy agreements they enter into with their customers.
   
   The provision is supported by privacy advocates for its encouragement of transparency, but opposed by businesses that are looking for the widest liability protections possible.


5. A Franken/Flake amendment that would implement a six-year sunset on the legislation – giving Congress an opportunity to tweak the bill during subsequent reauthorizations.


6. An amendment from Sen. Sheldon Whitehouse (D-Conn.) that would increase punishments for cybercrimes. The amendment, which would expand penalties for violating the Computer Fraud and Abuse Act, has drawn opposition from privacy advocates. The Computer Fraud and Abuse Act makes accessing protected computers and networks illegal, but has long come under fire for punishing low-level computer crimes and for discouraging legitimate security research.
   
   The Whitehouse amendment to CISA would allow a zealous prosecutor to seek up to 20 years of prison time for an individual who harms a computer connected to "critical infrastructure," a term broadly defined by the Patriot Act.

The election we aren’t talking about

While the American media is already in full 2016 election mode, there is another very important election occurring this year on our continent that very few of us in this country even know is occurring. In just over eight weeks, our neighbors to the north will go to the polls and decide whether to re-elect conservative Prime Minister Stephen Harper for his fourth term, or elect one of two more liberal party leaders.

Canada is a parliamentary democracy, meaning that the political party (or coalition of parties) with the most representation in Parliament gets to pick the country's leader, rather than that being directly decided by voters. Canadians elect members of Parliament's House of Commons from a variety of political parties, with one or two parties holding a plurality. The leader of the majority party, if there is one, becomes prime minister. The prime minister in turn recommends members of the Senate, which the governor general (the largely ceremonial head of state) then approves. In Canada, the general-election season officially begins only when the prime minister asks the governor general to dissolve Parliament.

Meet the candidates:

Stephen Harper, Conservative Party of Canada: Under Harper's leadership, the CPC has transformed from a minority party to the majority party. Since he was elected prime minister in 2006, he has dismissed social conservatives and moved his party more toward the center.

Thomas Mulcair, New Democratic Party: The NDP, which is roughly analogous to the United Kingdom's Labour Party, has vacuumed up support from more anti-establishment, French-speaking Canadians. But Mulcair has had to answer for his past as a proponent of "anglophone rights," and for his past ambitions to become a senior adviser to Harper as a Conservative. Now, francophone Quebec—Canada's second most populous province—will be central to Mulcair's bid to unseat Harper. If elected, Mulcair would be the first prime minister from his party.

Justin Trudeau, Liberal Party of Canada: Confusingly, Canada's "Liberal" party is more centrist than the New Democratic Party. Trudeau—the son of former Prime Minister Pierre Trudeau—seems to have some of the political intangibles that Harper and Mulcair lack, particularly in terms of charisma. He's made headlines, and conservative enemies, by defending abortion and calling for the legalization of marijuana.

Earlier this month, Harper dissolved Parliament, meaning that the formal Canadian election season is taking place over the course of 11 weeks. It's almost unfathomable to think of a U.S. presidential campaign starting that close to the date of the election, yet this election cycle will be one of the longest campaigns in Canadian history. By comparison, four of the past five election seasons were just five weeks long.

Along with being the longest, this election is also poised to be the most expensive in Canadian history. One outlet estimated that parties could spend upward of $50 million on this election, despite campaign-spending caps imposed in 2011. That's because Harper recently raised the spending cap for candidates for each day the campaign season goes past 37 days. Coincidentally, Harper's party has raised more than other parties, meaning it will have more time and funds to plaster Canadian televisions with pro-Harper ads.

There are real policy implications for the U.S. at stake in this election. The most obvious example here is the Keystone pipeline, which Mulcair's New Democratic Party opposes. If Mulcair wins—and his party is slightly widening its lead ahead of Harper's party—that throws a wrench in U.S. proponents' plans for the pipeline. While it would be a frustrating outcome for Republicans, it would be a big relief to Hillary Clinton, who has refused to come down for or against the project.

While all three parties have been polling closely, the NDP has been leading the pack, and recently gained traction in one of Canada's largest provinces.

Canada also carries outsized influence on U.S. trade policy, as it is the United States' largest partner in trade. And as the Obama administration struggles to cobble together support for the Trans-Pacific Partnership trade deal by mid-September, Canada's support is becoming more and more crucial. Last month, trade negotiations were temporarily held up by Canadian dairy interests. More recently, officials from the Canadian and Mexican auto sectors have been putting pressure on the U.S. to clarify tariffs on auto parts.

August recess special “back to school” series continues

Since we are in the midst of the August recess – the time when both chambers are out of session – we thought it might be a good time to take the opportunity to explain a little bit more about some of the more complex processes on the Hill. Think of it as a “back to school” primer on how Washington works. This week, we explain what a “continuing resolution” is and when it’s necessary.

Congress holds the so-called “power of the purse” in our government, which means they are responsible for passing legislation to fund the government by October 1 (the fiscal year ends on September 30).

The first step in this process is the passage of a budget resolution. The one key purpose behind the budget resolution is to set the total level of discretionary funding – known as the “302a allocation” – for the next fiscal year. Budget resolutions look at federal spending in 10-year windows, but resolutions are not binding beyond the approaching fiscal year.

Once the 302a allocation is set, the Appropriations Committees in both chambers are tasked with passing 12 separate appropriations bills. In theory, under what is known as “regular order,” both chambers would pass all 12 appropriations bills, reconcile any differences and send all 12 to the president for his signature before October 1. In practice, this rarely happens anymore in Washington.

In the event that they are unable to meet the October 1 deadline, Congress can pass legislation to keep federal operations going at the current spending levels. That legislation is called a Continuing Resolution (CR).

A CR is a temporary extension, which is passed to give Congress time to finish the appropriations process. If Congress fails to finish the appropriations process by October 1 and fail to pass a CR the government would shut down – like it did for 16 days in 2013.

 

  

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