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Capitol Update: Cue the Wet Blanket for Issue #2

Capitol Update

We are one month into the new Congress and the gears of power are already turning furiously as the legislative process is well under way. Much to my own surprise the Congress got off to an early start and passed an extension of the Terrorism Risk Insurance Act (TRIA) less than a week into the new session. The President signed it shortly thereafter, taking off of the table an important issue for the apartment industry and many other business sectors. Rarely does this happen, but after the last-second fumble (I won’t say interception out of deference to our friends in the Pacific Northwest) by the Senate on TRIA, I think everyone felt obligated to move quickly. Not a bad way to start things off.

And now cue the wet blanket. The next imminent issue will not result in such a kumbaya moment between the Congress and the White House – funding for the Department of Homeland Security. This one area of the federal budget was short funded last year so that Congress could leave itself an opportunity to try and stop the President’s executive order on immigration. The House passed its bill, but the Senate was unable to get past the 60-vote threshold to take up the legislation so now Republicans must come up with a Plan B. 

If they allow the funding window to close, they could face blowback for shutting down a critical agency responsible for protecting the nation. If they drop the injurious language in order to draw Democrats and pass the legislation, Mitch McConnell (R-Ky.) faces cannon fire from the likes of Senators Cruz (R-Texas), Lee (R-Utah), Paul (R-Ky.) and Rubio (R-Fla.) inside the Senate not to mention the legions of conservatives on the outside who demand the GOP do something to stop the President. This topic has helped to keep the overall issue of immigration reform on the front burner for the Congress and some action could still occur in the next two years. NAA is engaged with lawmakers as these conversations take place.

Speaking of partisan hot buttons, the House Republicans voted for the 56th time this month to repeal the Affordable Care Act (ACA). While they know they lack the votes in the Senate to pass the legislation, leadership needed to give their new members the opportunity to go on record. Interestingly, for the first time since the law was passed, there were GOP defectors. Three Republican House members voted against the legislation on the grounds that without a fully cooked alternative to the ACA, it was irresponsible to repeal the law when that would result in thousands of Americans losing health care coverage. This narrative is gaining strength not only because of Congressional action but because of a looming decision by the Supreme Court of the United States (SCOTUS) in regards to subsidies provided through the ACA.

In the case of King vs. Burwell, the SCOTUS is considering whether or not the ACA allows for tax credit subsidies for eligible enrolled participants in all states or just those states that have their own health care exchanges. Should the Court rule that it does not, then those individuals in states that use the federal exchange will immediately lose their subsidy and in theory their health care coverage. Estimates are this could be as many as 9 million people. Both sides of the debate agree that this ruling by the Court would be a deadly blow to the law, but they obviously disagree as to whether that is a good thing or a bad thing. It’s also worth noting that the issue could be remedied by impacted states if they simply started their own exchange. This of course costs money and takes a lot of time but would allow their residents to receive tax credit subsidies again. This will be the most significant development in regards to the ACA since the SCOTUS ruling on the individual mandate.

Four years since its passage, the ACA is still a touchstone for Republicans in Congress. There has been somewhat of a shift from simple repeal to repeal and replace. There are even some, especially in the Senate, who want to move on to other priorities. Still, saying you hate the ACA and voting to repeal it are check-the-box exercises which every Republican must do in order to stave off primary challenges. The good news is that the President has given the GOP lots of new targets to fire at – immigration, the war with ISIS, the federal budget and tax policy. 

In other news, Senate Majority Leader McConnell and the President each got an early valentine from Senate Democrats this month. McConnell got the votes he needed to pass legislation approving the Keystone Pipeline project. This legislation will pass the House and then go to the President before the end of the month. The President will now – assuming he sticks with his threat on the bill – be able to veto his first bill of the 114th Congress. That will mean a 50 percent increase in vetoed bills since the start of his presidency (he has only vetoed two bills since taking office in 2009). Meanwhile, McConnell will have evidence that he can govern in a divided Senate, even with less than 60 votes. Time will tell if he can replicate this success in other substantive areas and whether those additional successes will also result in a Presidential veto.

I’ll close with a pitch for the NAA Capitol Conference. If you have not registered yet, you still can! Just go to the 2015 NAA Capitol Conference website  for the registration form, detailed agenda and other materials. We have just confirmed HUD Secretary Julian Castro as our luncheon speaker on March 17. He joins journalist David Gregory and photographer/storyteller Platon on our speakers list in what is a packed two days of information and advocacy. The issues that NAA members will take to the Congress on March 18 are immigration, reform of the Section 8 voucher program and proposed changes to the nation’s tax code. All critical concerns for owners, operators and managers of apartment communities in every corner of the nation. I hope you will be one of the voices taking our message to Capitol Hill during the conference.

That’s all for now. Talk with you next month.

Regards,

Greg