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Report from Washington

The new Congress convened in early January with a full agenda in front of it, including a wide range of issues from tax reform to trade. And, we have a new president and administration that is already pursuing many of its campaign promises.

 Partly as a result of President Trump’s early and expansive executive orders, the Senate Democrats have decided on a strategy to try to block as many of his nominations and force the Republicans to band together to get these nominations completed and fill the 5,000 plus appointments in the administration. Without these political appointments, the federal government’s policy direction essentially grinds to a halt waiting for the executive authority to make decisions and sign documents. As we await these confirmations and appointments, the federal government is being run by acting secretaries and deputes whenever possible including the U.S. Environmental Protection Agency. These acting employees are usually career government employees who fill these roles on a temporary basis whenever there is a long term vacancy. While things seem to be taking more time than in past transitions, shortly, everyone will be in place and the agenda of President Trump will begin to take shape.

At the other end of Pennsylvania Avenue, Congress is working hard on their own set of campaign promises namely, repealing and replacing the Affordable Care Act and passing comprehensive trade reform. Even with majorities in both Hoses, Republicans do not have the votes to ram everything through Congress without some Democratic support. That is because it normally requires 60 votes in the Senate to get past a procedural step to vote on the actual legislation. There is a caveat when the Senate is simply addressing budget issues and can invoke what is called reconciliation where only 51 votes is necessary. Therefore, Congress will try to pass as much as they can using reconciliation but very few things can get past that way.

Tax reform will be a major item as this is a once in a lifetime opportunity to fix the complicated U.S. tax system. However, reducing one person’s taxes by increasing another’s is fraught with problems. For instance, there is an effort to eliminate as many of the tax benefits as possible to pay for general reductions in the marginal corporate and individual tax rates. While initially eliminating these deductions sounds like a good idea to streamline the tax code and make it fairer, the battles lines are already drawn for the largest of those deductions such as the famed mortgage interest and state property taxes deduction for real estate. Also, eliminating special tax allowances such as accelerated depreciation for certain industries are also being proposed. ISRI secured a special depreciation allowance for qualified recycling equipment in 2008 which we will be defending.

Trade is also a very important topic being discussed in both Congress and the White House. In one instance, House Republicans are proposing a special 20 percent border adjustment tax to pay for reducing corporate income rates. Repatriating offshore corporate income at a low rate is also another way to raise substantial revenue of as much as $2 billion. Those funds would then be used to fund the president’s infrastructure plans. The president has indicated that he intends to renegotiate trade agreements such as NAFTA and has already killed the Trans-Pacific Partnership by executive order along with trying to impose new immigration freezes. Now with the president’s secretary of state in place, we should begin to see more normality where the respective agencies exercise authority.

In summary, we are about three weeks into a new administration with a very polarized Congress slowing down many aspects of getting the government up and running in an efficient manner. As we wait and watch for that ‘normalcy’ to reappear, things may seem a little bumpier than usual. However, ISRI is like everyone else, strengthening existing relationships and making new friends which is what happens every four or eight years. In the meantime, please do not hesitate to ask questions and get involved in the process. You may wish to visit our Industry Advocates Program where you can learn more about the most effective ways to engage with your lawmakers regardless of which political party you belong to or what issues you want to address. Only with an educated and engaged public will our nation continue to be that shining city on a hill. 

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