Capital Thinking ~ February 11, 2013


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Capital Thinking ~ February 11, 2013

  1. 1. February 11, 2013
  2. 2. General LegislativeTomorrow, February 12, 2013, the House will meet at 12:00 pm for morning hour and 2:00 pm forlegislative business. The House will recess no later than 5:30 pm to allow a security sweep of theHouse Chamber prior to the President’s State of the Union address. The House will meet again atapproximately 8:35 pm for the purpose of receiving, in a joint session with the Senate, thePresident of the United States. No votes are expected. Legislation Considered Under Suspensionof the Rules will include: (1) H.R. 267 – Hydropower Regulatory Efficiency Act of 2013; (2) H.R. 316– Collinsville Renewable Energy Promotion Act; and (3) H.R. 235 – Veteran Emergency MedicalTechnician Support Act of 2013.On Wednesday and Thursday, the House will meet at 10:00 am for morning hour and 12:00 pm forlegislative business. On Friday, the House will meet at 9:00 am for legislative business. Lastvotes expected no later than 3:00 pm. Legislation under consideration will include: (1) H.R. 592 –To amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act to clarify thathouses of worship are eligible for certain disaster relief and emergency assistance on terms equalto other eligible private nonprofit facilities, and for other purposes; and (2) H.R. 273 – To eliminatethe 2013 statutory pay adjustment for Federal employees (Subject to a Rule).The Senate will convene today, February 11, 2013, at 2:00 pm to resume consideration of S. 47, theViolence Against Women Act.Agriculture & FoodLEGISLATIVE ACTIVITY Immigration Reform. Last week, the House Judiciary Committee held a hearing on immigration, where Chairman Bob Goodlatte (R-VA) expressed the need to reform the H-2A visa program. He also suggested a piecemeal approach to immigration reform, which could hamper efforts to pass a bill through both chambers by summer. During the hearing, specific issues were raised that highlighted the immigration reform agenda for some Members of Congress. Representative Zoe Lofgren (D-CA) cautioned against expanding E-Verify, stating that U.S. agriculture would collapse if farms were subject to the online system, but Republicans pushed back, questioning whether the sector would truly fail without migrant farm labor. Additionally, Representative Louie Gohmert (R-TX) suggested that farmers pay for their farmworkers’ health care, and Representative Steve King (R-IA) made the point that businesses have become too reliant on illegal labor.Patton Boggs Capital Thinking Weekly Update | February 11, 2013 1 of 16
  3. 3.  State of the Union. The President is expected to address immigration, and possibly his recent meetings with United Farm Workers and Cargill, Inc., during his State of the Union address this Tuesday, February 12. Upcoming Hearings. On Wednesday, February 13, the Senate Judiciary Committee will hold its hearing on immigration reform, and Members including Senator Dianne Feinstein (D-CA) are likely to raise questions related to farmworkers and other issues in the intersection between agriculture and immigration. On Thursday, February 14, the Senate Agriculture, Nutrition and Forestry Committee will hold its organizational meeting and a hearing on the “Impact of Weather Disasters on Agriculture.”Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Dana Weekes at 202-457-6307 or; and Karen Kudelko at 202-457-5132 or, Appropriations, and Sequestration President’s State of the Union Address. On Tuesday, February 12, the President will deliver his fourth State of the Union Address in which he will outline his priorities for 2013. He will reiterate his message to Congress last week, urging them to approve a balanced plan to avert the sequester scheduled for March 1 and to resolve the FY 2013 appropriations process before the Continuing Resolution expires on March 27. House Budget Action. Last week, the House approved the Require Presidential Leadership and No Deficit (PLAN) Act (H.R. 444), which would require the President to propose an FY 2014 Budget that balances the federal budget within 10 years or, alternatively, submit a supplemental proposal designating when a balanced budget would be reached. An amendment requiring the supplemental budget to include the estimated cost per taxpayer for each year of the deficit was also approved. The bill is likely dead-on-arrival in the Senate. House Budget Committee Chairman Paul Ryan (R-WI) also announced that efforts on an FY 2014 Budget Resolution are moving forward with adoption by the House anticipated by April 1.SEQUESTRATION ACTIVITY Congressional Budget Office Economic Outlook. Last week, the Congressional Budget Office (CBO) released its annual Budget and Economic Outlook for FY 2013 – FY 2023. The report highlights that, under current law, the FY 2013 deficit will decline to $845 billion, the lowest since 2008. The report also warns that sequestration could result in 1 million jobs lost and cause another recession. CBO Director Douglas Elmendorf testified on the report to the House Budget Committee last week and is scheduled to appear before the Senate Budget Committee on Tuesday, February 12.Patton Boggs Capital Thinking Weekly Update | February 11, 2013 2 of 16
  4. 4.  White house Outlines Sequester Impact. On Friday, February 8 the White House released a fact sheet titled “Examples of How the Sequester Would Impact Middle Class Families, Jobs and Economic Security,” which highlights the anticipated effect of sequestration on education, economic growth, food safety, public health and security. Also on Friday, the White House Office of Management and Budget (OMB) revised the estimated percentage impact of the first year of sequestration on defense and nondefense programs (following the fiscal cliff agreement – in which the first two months of sequestration were offset - OMB released a fact sheet in which defense programs were estimated to face an eight percent reduction, while nondefense programs were estimated to face only a five percent reduction). Now that 10 months of sequestration cuts would be implemented in the remaining seven months of FY 2013, OMB estimates that defense programs will be reduced by 13 percent and nondefense programs will be reduced by nine percent for the remainder of FY 2013. Dueling Congressional Proposals. Democrats and Republicans are publicly expressing concern over the impact of sequestration, but remain at odds over how to replace the across-the-board spending cuts. A number of proposals are in development, but none are likely to gain sufficient bipartisan support to reach enactment. To highlight a few: o Senior Senate Democrats are crafting a short-term measure to replace the sequestration process scheduled to begin on March 1, reportedly working toward a 50-50 split between targeted spending reductions and tax revenue to replace the across-the-board spending cuts. The length of the proposal remains in question – three months; seven months (through FY 2013); or 10 months (through calendar year 2013). They intend to introduce the bill this week, with floor consideration possible the week of February 25. o House and Senate Republicans will likely re-introduce a proposal to avert the FY 2013 sequestration through a 10 percent reduction in the federal workforce over the next 10 years through attrition (federal agencies would only hire one new employee for every three departures) and a Congressional pay freeze. o House Republicans will likely move a bill that would replace sequestration with reductions to entitlement spending (the House passed two similar measures in 2012). Congressional Hearings/Meetings. A number of Congressional Committee hearings and other meetings are scheduled this week to analyze the federal budget and the impact of sequestration on the economy, the Department of Defense and related industries, and federal services. These include: o Monday, February 11 – National Press Club, Coalition for Health Funding press conference on the impact of sequestration on defense, public health and higher education o Tuesday, February 12 – Senate Budget Committee, hearing on the CBO’s Budget and Economic OutlookPatton Boggs Capital Thinking Weekly Update | February 11, 2013 3 of 16
  5. 5. o Tuesday, February 12 – National Press Club, “House Democratic and Republican Budget Leaders Chris Van Hollen (D-MD) (Budget Committee Ranking Member) and Tom Price (R-GA) (Budget Committee Vice Chairman) to Discuss Sequestration, Fiscal Cliff, Budget” o Tuesday, February 12 – Senate Armed Services Committee, “Oversight: Impacts of Sequestration and/or CR” o Wednesday, February 13 – Senate Budget Committee, Hearing on the Impact of Budget Decisions on Families and Communities o Wednesday, February 13 – House Armed Services Committee, “Impacts of a Continuing Resolution and Sequestration on Defense.” o Wednesday, February 13 – House Budget Committee, “The Congressional Budget Office’s Budget and Economic Outlook.” o Thursday, February 14 – House Education and the Workforce Committee, Subcommittee on Workforce Protections, “Sequestration: Examining Employers’ WARN Act Responsibilities” o Thursday, February 14 –Senate Appropriations Committee hearing on the impact of sequestration on federal departments and agencies Agency Preparation. Federal agencies are preparing plans for sequestration, including possible furloughs for civilian employees. The general consensus, however, is that the agencies have sufficient budgetary flexibility to forestall the impact of sequestration, including furloughs (which require 30-day notice) for several weeks in the event the spending cuts are not addressed separately, but are included in the resolution of the FY 2013 appropriations process which must occur by March 27. The cost of sequestration for the month of March is estimated at $12 billion. Agencies are likely to first implement hiring delays and cut nonessential costs (i.e. travel, training) in order to achieve their reductions. However, efforts to retain existing workforce may result in more significant reductions to grants and other funding mechanisms.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Pam Welsh at 202-457-6493 or BRANCH ACTIVITY Recent Cyber Attacks. Last week, the Department of Energy, as well as a number of major media organizations including The New York Times, The Wall Street Journal, and The Washington Post,Patton Boggs Capital Thinking Weekly Update | February 11, 2013 4 of 16
  6. 6. reported incidents of high-profile cyber attacks – many of which have been linked to Chinese hackers. The recent attacks have renewed the conversation surrounding the need for cybersecurity legislation in Congress. Chairman of the Senate Homeland Security and Governmental Affairs Committee Tom Carper (D-DE) and Chairman of the House Homeland Security Committee Michael McCaul (R-TX) condemned the attacks and indicated that their respective committees will hold hearings on cybersecurity-related issues in the coming weeks. The House Permanent Select Committee on Intelligence has already scheduled a hearing titled “Advanced Cyber Threats Facing our Nation” for Thursday, February 14, at 10 a.m. Cyber Intelligence Sharing and Protection Act (CISPA). On Wednesday, February 13, House Intelligence Committee Chairman Mike Rogers (R-MI) and Ranking Member C.A. Dutch Ruppersberger (D-MD) plan to reintroduce their cybersecurity information sharing legislation, the Cyber Intelligence Sharing and Protection Act (CISPA). The bill is likely to be very similar to the legislation that passed the House last April, which would have created an information sharing platform between the intelligence community and the private sector to deter cyber threats to U.S. networks. Given the White House veto threat issued on the CISPA bill last Congress, Rep. Ruppersberger has been working with the Obama Administration to address its concerns over the lack of privacy protections in the last iteration of the bill.EXECUTIVE BRANCH ACTIVITY Executive Order. The Obama Administration is expected to release its cybersecurity Executive Order (EO) after the President’s State of the Union address this week. Release of the EO will likely be a starting point for cybersecurity legislation this Congress as many Members have stated that they will wait to see what is in the EO before beginning work on a cybersecurity bill. It is widely acknowledged that the EO will not replace the need for comprehensive cybersecurity legislation – a fact that was reiterated by White House Senior Director for Cybersecurity Andy Ozment at a meeting of the National Association for Regulatory Utility Commissioners last week.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Amy Davenport at 202-457-6528 or ACTIVITY Workforce Investment Act. The House Education and the Workforce Committee is expected to move toward passage of a bill this month to reauthorize the Workforce Investment Act, which will seek to overhaul the current federal job training programs. A bill that mirrors the Committee’s th proposal in the 112 Congress is likely to resurface in the coming weeks and will look to consolidate many of the overlapping job-training programs into a large block grant to states. CommitteePatton Boggs Capital Thinking Weekly Update | February 11, 2013 5 of 16
  7. 7. Democrats opposed the measure last Congress and are expected to do so again. In the Senate, however, bipartisan negotiations are taking place, with Senators Patty Murray (D-WA) and Johnny Isakson (R-GA) taking the lead. A new bill will likely be based from progress made in that chamber last Congress, with the help of Senate Health, Education, Labor, and Pensions (HELP) Chairman Tom Harkin (D-IA) and then-Ranking Member Michael Enzi (R-WY). Senators are looking to include best practices from the Department of Labor and educational institutions across the country. Upcoming Hearings: o Wednesday, February 13 – The House Committee on Science, Space, and Technology Subcommittee on Research will hold a hearing on Wednesday, February 13, titled “Applications for Information Technology Research & Development.” In the Senate, the Senate HELP Committee will meet to organize, adopt rules, and make subcommittee assignments. o Thursday, February 14 – The House Education and the Workforce’s Subcommittee on Early Childhood, Elementary and Secondary Education will hold a hearing titled “Raising the Bar: How Education Innovation Can Improve Student Achievement.” The Subcommittee on Workforce Protections also will hold a hearing titled “WARN Act and the Sequester.” The House Ways and Means Committee will hold a hearing titled “Review of Charitable Tax Deductions.”Contact InformationFor additional insights about likely policy developments, please feel free to contact the authors of thissection: Amy Budner Smith at 202-457-6154 or; and Dana Weekes at 202-457-6307 or ACTIVITY th Energy Policy Priorities. Key lawmakers outlined their energy goals for the 113 Congress. Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-OR) intends to focus initially on natural gas and current LNG exports policy, and then on how the country can produce more renewable energy and use the energy produced more efficiently. Ranking Member Lisa Murkowski (R-AK) has offered a comprehensive “energy blueprint” for discussion, which focuses on, among other topics, producing more and consuming less. House Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) will continue to champion expanded domestic energy production to “achieve North American energy independence.” Congressional Hearings. The Senate Energy and Natural Resources Committee plans to hold a business meeting – which will include assigning members to subcommittees – and a separate hearing regarding the “Opportunities and Challenges for Natural Gas” (including LNG exports) on Tuesday, February 12.Patton Boggs Capital Thinking Weekly Update | February 11, 2013 6 of 16
  8. 8. REGULATORY ACTIVITY Interior. President Obama has nominated REI chief executive Sally Jewel to be the next Interior Secretary. She has both environmental and oil industry credentials. If confirmed by the Senate, Ms. Jewell will be the second woman ever to lead the Interior Department and would break a streak of politicians leading the agency dating back to President Reagan’s appointment of Donald Hodel in 1985. “48C” Tax Credits. The Departments of Energy and the Treasury are providing $150 million in unused Advanced Energy Manufacturing Tax Credits for clean energy and energy efficiency manufacturing projects. Smart Grid. On February 26, the Department of Energy will convene a meeting of its smart grid data privacy multi-stakeholder process towards developing a Voluntary Code of Conduct for utility and third parties providing consumer energy use services. The meeting will also be webcast. Biomass. The Biomass Research and Development Technical Advisory Committee will next meet at the American Geophysical Union in Washington, DC on February 27-28. Offshore Wind. By public request, the Bureau of Ocean Energy Management has reopened the comment period for the environmental documentation process and the call for nominations of interests for commercial wind leasing offshore North Carolina. Nominations and/or comments must be submitted by March 7. EAC. The Department of Energy’s Electricity Advisory Committee (EAC) will next meet March 6-7 to discuss activities of the Energy Storage Technologies Subcommittee, the Smart Grid Subcommittee, and the Transmission Subcommittee, as well as discussions of cyber security issues in the power sector, resiliency, customer acceptance of Smart Grid technology issues, and Department of Energy’s Utility of the Future Initiative. OCS Lease Sale 227. The Bureau of Ocean Energy Management will announce bids received for a lease sale covering 38.6 million acres in the Central Gulf of Mexico on March 20 in New Orleans. All sealed bids must be submitted by March 19.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Tanya DeRivi at 202-457-6504 or Boggs Capital Thinking Weekly Update | February 11, 2013 7 of 16
  9. 9. EnvironmentLEGISLATIVE ACTIVITY Natural Gas. On Tuesday, February 12, the Senate Committee on Energy and Natural Resources will hold a full committee hearing titled “Opportunities and Challenges for Natural Gas.” The purpose of the hearing is to explore opportunities and challenges regarding America’s natural gas resources. Draught. On Thursday, February 14, the Senate Committee on Agriculture, Nutrition and Forestry will hold a hearing titled “Drought, Fire and Freeze: The Economics of Disasters for America’s Agricultural Producers.” The hearing is intended to examine the effects of weather disasters on American agriculture. Witnesses will include Dr. Joe Glauber, Chief Economist, U. S. Department of Agriculture, and Dr. Roger Pulwarty, Director of the National Integrated Drought Information System, National Oceanic and Atmospheric Administration, as well as farmers and ranchers from across the country.REGULATORY ACTIVITY Gulf Coast Ecosystem Restoration. The Gulf Coast Ecosystem Restoration Council (the Council) has announced upcoming public engagement sessions in the Gulf States. The Council announced the dates for public engagement sessions to provide early opportunities for initial input into the Comprehensive Plan. Public engagement sessions will be held in Mississippi on February 19; in Louisiana on February 19, 20 and 21; and in Florida on February 28. The Council, which was established by the Resources and Ecosystem Sustainability, Tourism, Opportunities Revived Economies of the Gulf Coast States Act of 2012 (RESTORE Act), is intended to help restore the ecosystem and economy of the Gulf Coast region by developing and overseeing implementation of a Comprehensive Plan, which the Council intends to complete by July 6. State and EPA Compliance Maps. On Tuesday, February 12, the U.S. Environmental Protection Agency (EPA) will host a webinar demonstrating how to use state dashboards and comparative maps that provide information about the performance of state and EPA compliance programs across the country. The dashboards and maps include state level data from the last five years and provide information including the number of completed inspections and enforcement actions taken by state. The dashboards are located on EPA’s Enforcement and Compliance History Online (ECHO) website. 2013 Renewable Fuel Standards. EPA has released a proposed rule on renewable and traditional fuels for which comments are due by March 25. Entities potentially affected by this proposed rule are those involved with the production, distribution and sale of transportation fuels, including gasoline and diesel fuel and renewable fuels such as ethanol and biodiesel. EPA has proposed that the applicable volumes of advanced biofuel and total renewable fuel would remain at the statutory levels for 2013. EPA has also proposed annual percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and renewable fuels that would apply to all gasoline and diesel produced or imported in year 2013.Patton Boggs Capital Thinking Weekly Update | February 11, 2013 8 of 16
  10. 10.  Offshore Wind Power. The U.S. Department of Interior, Bureau of Ocean Energy Management (BOEM), has reopened the comment period concerning the preparation of an Environmental Assessment (EA) for Commercial Wind Leasing and Site Assessment Activities on the Outer Continental Shelf (OCS) Offshore North Carolina. Comments are due by March 7.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Sarah Vilms at 202-457-5248 or ServicesLEGISLATIVE ACTIVITY Senate Banking Subcommittee Chairmen Announced. Senate Banking Committee Chairman Tim Johnson (D-SD) announced the Chairmen of the Subcommittees. Senator Jon Tester (D-MT) will replace Senator Jack Reed (D-RI) on the Securities, Insurance, and Investment Subcommittee, and Senator Jeff Merkley (D-OR) will fill Senator Tester’s former role as Chairman of the Economic Policy Subcommittee. Senator Robert Menendez (D-NJ) will remain in the Housing, Transportation and Community Development Subcommittee; Senator Sherrod Brown (D-OH) will continue to chair the Financial Institutions and Consumer Protection Subcommittee; and Senator Mark Warner (D-VA) will serve as Chairman of the National Security and International Trade and Finance Subcommittee. Nominee for Treasury Secretary to Appear before Congress. On Wednesday, February 13, former White House Chief of Staff and nominee for Secretary of the Treasury Jack Lew will appear before the Senate Finance Committee for his nomination hearing. HFSC to Hold Second FHA Hearing. On Wednesday, February 13, the House Financial Services Committee will hold a hearing titled “Bailout, Bust, or Much Ado About Nothing?: A Look at the Federal Housing Administration’s 2012 Actuarial Report.” FHA Commissioner Carol Galante is expected to testify. This is the second FHA-related hearing, following last week’s hearing on the same topic. Senators to Review Dodd-Frank Implementation. On Thursday, February 14, the Senate Banking Committee will hold a hearing titled “Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections.” Witnesses will include: Mary Miller, Treasury Undersecretary for Domestic Finance; Daniel Tarullo, Member, Federal Reserve Board of Governors; Martin Gruenberg, Chairman, Federal Deposit Insurance Corporation (FDIC); Tom Curry, Comptroller, Office of the Comptroller of the Currency (OCC); Richard Cordray, Director, Consumer Financial Protection Bureau (CFPB); Elisse Walter, Chairman, Securities and Exchange Commission (SEC); and Gary Gensler, Chairman, Commodity Futures Trading Commission (CFTC).Patton Boggs Capital Thinking Weekly Update | February 11, 2013 9 of 16
  11. 11. REGULATORY ACTIVITY FDIC to Hold Open Meeting. On Tuesday, February 12, the FDIC will hold an open meeting to discuss the proposed rulemaking related to the definition of “insured deposit.”FINANCIAL SERVICES NEWS Royal Bank of Scotland Settles LIBOR Charges with U.S. Regulators. The Royal Bank of Scotland plc and RBS Securities Japan Limited settled charges of manipulating the London Interbank Offered Rate, or LIBOR, with U.S. regulators this week. RBS will pay the CFTC a $325 million civil monetary penalty and improve certain internal controls. Similarly, RBS pled guilty to a Department of Justice-initiated criminal charge of wire fraud and agreed to pay a $150 million penalty. Department of Justice Files Suit Against Credit Rating Agency S&P. Earlier this week, the Department of Justice filed a civil suit against Standard & Poor’s credit rating agency and its parent company McGraw-Hill Companies, Inc. The complaint alleges that S&P knowingly inflated the credit ratings it assigned to residential mortgage-backed securities, or securitizations, and collateralized debt obligations. The Department of Justice claims that S&P ignored conflicts of interest and ignored credit ratings criteria for issuances between 2004 and 2007.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Matthew Kulkin at 202-457-6056 or CareLEGISLATIVE ACTIVITY House Republicans Estimate Burden of ACA. The House Republicans on the Ways and Means, Energy and Commerce, and Education and Workforce Committees updated their estimate of the regulatory burden of the Affordable Care Act (ACA). The attached analysis estimates that the ACA will take businesses and families more than 127 million hours to comply with. An earlier estimate released in September 2012 found that half of the compliance burden would hit small businesses. SGR Reform Bill. Reps. Allyson Schwartz (D-PA) and Joe Heck, D.O. (R-NV) introduced the Medicare Physician Payment Innovation Act to ensure patient access to physicians while promoting efficiency, quality and value in health care delivery. The bipartisan legislation permanently repeals the Sustainable Growth Rate (SGR) formula and sets out a clear path toward comprehensive reforms of Medicare payment and delivery systems. This week, the Congressional Budget Office significantly lowered its estimate of the cost to permanently repeal the SGR from $245 billion to $138 billion.Patton Boggs Capital Thinking Weekly Update | February 11, 2013 10 of 16
  12. 12.  Energy and Commerce and Ways and Means Outline SGR Reform. House Energy and Commerce Committee Chairman Fred Upton (R-MI), Health Subcommittee Chairman Joe Pitts (R- PA) and Vice-Chairman Michael Burgess (R-TX) joined Ways and Means Chairman Dave Camp (R- MI) and Health Subcommittee Chairman Kevin Brady (R-TX) to outline efforts to repeal the SGR formula and advance a permanent solution for the Medicare physician payment system. Following th efforts and stakeholder meetings during the 112 Congress, the proposal would roll out in phases including the repeal of the SGR and provide a period of predictable, statutorily-defined physician payment rates, reform Medicare’s fee for service (FFS) physician payment system to reward physicians who provide high quality care, and build upon the improvements made in the second phase by also rewarding physicians who deliver efficient care. Medical Device Tax Repeal Bill. Representatives Paulsen (R-MN) and Kind (D-WI) re-introduced legislation to repeal the medical device tax (H.R. 523). 20 House Democrats are original cosponsors of the legislation. House Majority Leader Eric Cantor (R-CA) stated that repealing the medical device tax is a way to start to roll back the increase in costs and barriers to access to care and innovation that the ACA put into place. On the Senate side, Senators Orrin Hatch (R-UT) and Amy Klobuchar (D- MN) re-introduced S. 232 to repeal the medical device tax. House VA Hearing. The House Committee on Veterans Affairs will hold a hearing on Wednesday, February 13, titled “Honoring the Commitment: Overcoming Barriers to Quality Mental Health Care for Veterans.” Senate HELP Mark. The Senate Committee on Health, Education, Labor and Pensions will meet in Executive Session on Wednesday, February 13, to consider H.R. 307, the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 and S. __, the Prematurity Research Expansion and Education for Mothers Who Deliver Infants Early (PREEMIE) Act. House Energy and Commerce Hearings. The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations has scheduled a hearing on Wednesday, February 13, on “Influenza: Perspective on Current Season and Update on Preparedness.” The Subcommittee on Health will also hold a hearing on Thursday, February 14, titled “SGR: Data, Measures and Models; Building a Future Medicare Physician Payment System.” House Ways and Means Hearing. The House Committee on Ways and Means will hold a hearing on Thursday, February 14, on Tax Reform and Charitable Contributions. Senate Finance Hearing. The Senate Committee on Finance will hold a hearing on Thursday, February 14, on “Health Insurance Exchanges: Progress Report.” Witnesses include Gary Cohen, Deputy Administrator and Director of CMS; Don Hughes, Advisor to the Governor of Arizona; Christine Ferguson, Director of the Rhode Island Health Benefit Exchange; Bettina Riveros, Advisor to the Governor and Chair of the Delaware Health Care Commission.REGULATORY ACTIVITY AHRQ Health IT Update: Childrens EHR Format. The Agency for Healthcare Research and Quality (AHRQ) announced a new children’s electronic health record database that can help softwarePatton Boggs Capital Thinking Weekly Update | February 11, 2013 11 of 16
  13. 13. developers create better Electronic Health Records (EHRs) for the care of children. The children’s EHR format establishes a blueprint for EHRs to better meet the needs of health care providers and pediatric patients by combining best practices in clinical care, information technology and insights from experts in children’s health. Since few EHRs have been created with children’s needs in mind, gaps in functionality, data elements and other areas tend to occur. The format guides EHR developers in understanding the requirements for functionality, data standards, usability and interoperability of an EHR system to more optimally support the provision of health care to children – especially those enrolled in Medicaid or the Children’s Health Insurance Program (CHIP). The format is readily accessible and adoptable by EHR developers for use during product development or enhancement. In addition to providing guidance to developers, the format can provide guidance for EHR system purchasers and policy makers. For example, policy makers and purchasers can use the requirements when assessing functionality of EHRs.OTHER HEALTH NEWS CBO Report. The Congressional Budget Office (CBO) posted its annual Budget and Economic Outlook for fiscal years 2013 to 2023. If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $845 billion, or 5.3 percent of gross domestic product (GDP), its smallest size since 2008. In CBO’s baseline projections, deficits continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015. Deficits are projected to increase later in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects. After this year, economic growth will speed up, CBO projects, causing the unemployment rate to decline and inflation and interest rates to eventually rise from their current low levels. Nevertheless, the unemployment rate is expected to remain above 7.5 percent through next year; if that happens, 2014 will be the sixth consecutive year with unemployment exceeding 7.5 percent of the labor force— the longest such period in the past 70 years. MACPAC Meeting. The Medicaid and Chip Payment and Access Commission (MACPAC) has scheduled a public meeting on February 12-13. The agenda includes the following: sessions on Medicaid and public health, an update on the Medicaid primary care Physician payment increase, CMS initiatives to improve data for program operations and evaluation, an overview of partial-benefit dual eligibles, a review of the draft March report, a review of new proposed Medicaid rule, a March chapter review, a review of recommendations for March report for eligibility issues in Medicaid and CHIP, and state Medicaid managed care enrollment policies. IOM Meeting. The Institute of Medicine’s (IOM) Board on Health Care Services will hold a workshop st on Monday, February 11, on “Implementing a National Cancer Clinical Trials System for the 21 Century.” The workshop will examine ongoing activities in the implementation of the recommendations put forth in the IOM consensus report.Patton Boggs Capital Thinking Weekly Update | February 11, 2013 12 of 16
  14. 14.  The Board on Global Health will release a report on Wednesday, February 13, titled “Countering the Problem of Substandard and Falsified Drugs.” The IOM will also hold a forum on International Regulatory Harmonization Amid Globalization of Biomedical Research and Medical Product Development on February 13-14. The workshop will address needs for international harmonization of regulatory standards to support the development, evaluation and surveillance of biomedical products, specifically identifying principles, potential approaches and strategies to advance the development or evolution of more harmonized regulatory standards.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Eugenia Edwards at 202-457-5622 or, Defense, and Homeland SecurityLEGISLATIVE ACTIVITY Middle East Developments. Following the White House’s announcement this past week that President Obama will visit Israel, the Palestinian Authority, Jordan and possibly other Middle Eastern destinations this spring on the first foreign trip of his second term, the Administration will gear up to make progress on Israeli-Palestinian issues in the coming months. Secretary of State John Kerry has pushed the Administration to make the Middle East Peace Process a priority once again, and the announcement of the President’s trip suggests that the White House is heeding the new Secretary’s advice. President Obama is likely to visit Israel in late March, after Israeli Prime Minister Benjamin Netanyahu’s deadline to present his new government. The Prime Minister is almost certain to form a more centrist coalition than his previous government, after moderates made gains in the Knesset in the recent Israeli elections. Still, even if the next Israeli government is relatively more amenable to negotiations with the Palestinians, the question remains whether Palestinian Authority President Mahmoud Abbas credibly can simultaneously represent the interests of the Hamas-controlled Gaza Strip and be willing to sign onto the Quartet’s principles for further negotiations. If President Abbas somehow could straddle that line, then the onus would be on Prime Minister Netanyahu to agree that concerted discussions should move forward. Defense Spending Developments. In advance of the sequestration and government shutdown deadlines next month, defense industry leaders, such as BAE, are starting to embrace what they deem a balanced approach of targeted spending cuts, including on defense, and revenue increases. The industry’s new emphasis, articulated in a meeting with White House officials this past week, could help provide cover to President Obama, Senate Armed Services Committee Chairman Carl Levin (D-MI), and other Congressional Democrats, as they attempt to move a modest anti- sequestration replacement package in the coming weeks. However, most Congressional RepublicansPatton Boggs Capital Thinking Weekly Update | February 11, 2013 13 of 16
  15. 15. appear increasingly willing to take their fiscal and electoral chances with sequestration, rather than agree to Democratic demands for closing revenue loopholes and other revenue raisers. Senate Select Committee on Intelligence and Central Intelligence Agency (CIA) Developments. Following Thursday’s contentious nomination hearing for John Brennan to be the next Director of the CIA, it is not yet clear when the Committee will vote on the nomination. Given Brennan’s role as perhaps the leading architect of the Administration’s drone program for the last four years as White House Counterterrorism Adviser, Senator Ron Wyden (D-OR) and other circumspect Committee members will request, and likely receive, ample time to examine the Administration’s memorandum outlining the legal rationale for drone killings abroad of U.S. citizens who are considered enemy combatants. Senate Armed Services Committee (SASC) Developments. Similarly, the timing of a SASC vote on Secretary of Defense-designate Chuck Hagel’s nomination remains unclear. All 12 SASC Republicans and 13 other Senate Republicans requested more information on former Senator Hagel’s financial disclosures, after which Chairman Levin acceded to their request and delayed a possible Committee confirmation vote this past Thursday. Senate Foreign Relations Committee (SFRC) Developments. The SFRC will vote on Subcommittee jurisdictions and assignments on Wednesday, February 13. However, the SFRC’s work is typically more centralized than the Subcommittee-oriented House Foreign Affairs Committee. House Foreign Affairs Committee (HFAC) and State Department Developments. HFAC will examine the largely successful French-led intervention to combat Islamist rebels in northern Mali at a hearing on Thursday. Assistant Secretary of State for African Affairs Johnnie Carson will describe and defend the rather modest supporting role the United States has played in the effort. House Homeland Security Committee (HHSC) and Department of Homeland Security (DHS) Developments. The HHSC will commerce its hearing schedule for the new Congress this coming week. On Wednesday, February 13, new HHSC Chairman Michael McCaul (R-TX) will hold a broad- based hearing examining new perspective on homeland security threats. On Friday, February 14, Oversight Subcommittee Chairman Jeff Duncan (R-SC) will delve into DHS spending decisions, likely touching on body scanner and radiation portal deployments, among other issues.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Scott Thompson at 202-457-6110 or Boggs Capital Thinking Weekly Update | February 11, 2013 14 of 16
  16. 16. TaxLEGISLATIVE ACTIVITY  President, in Press Conference, Pushes Comprehensive Tax Reform. The President, on Tuesday, February 5, pressed Congress to find a way to avert the March 1 sequestration deadline that would bring automatic spending cuts to defense and domestic programs. President Obama called for a short-term package of alternative spending cuts and tax reform that would delay the sequester for some short time period. In addition, the President maintained that the long-term package offered to Republicans in December, which included entitlement changes such as chained-CPI, as well as revenue raising tax reform was still an option. Following the President’s brief remarks, White House Press Secretary Jay Carney stated that tax reform which raises $800 billion in revenue is achievable and highlighted certain areas of the Code, such as the carried interest exception, oil and gas provisions, 28 percent deduction cap, and corporate jet depreciation that would be ripe for reform.  Tax Hearings Next Week. The following tax hearings are scheduled in the House Ways and Means and Senate Finance Committees next week: o Wednesday, February 13 – Senate Finance hearing to Consider the Nomination of Jacob J. Lew, of New York, to be Secretary of the Treasury o Friday, February 14 – House Ways and Means hearing on Tax Reform and Charitable Contributions o Friday, February 14 – Senate Finance hearing titled Health Insurance Exchanges: Progress ReportContact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Joseph Urso at 202-457-5349 or ACTIVITY  STELA. The House Energy and Commerce Subcommittee on Communications and Technology will hold a hearing on Wednesday, February 13, titled “Satellite Video 101.” Every five yearsPatton Boggs Capital Thinking Weekly Update | February 11, 2013 15 of 16
  17. 17. Congress considers legislation to reauthorize the statutory license that allows satellite carriers to retransmit television programs that are embodied in distant broadcast transmissions, provided that the satellite carrier pays royalties to the Copyright Office. The Satellite Television Extension and Localism Act (STELA) is expected to expire on December 31, 2014, but the Subcommittee is holding what is expected to be a series of hearings on its reauthorization. This hearing is likely to provide a primer on the statute to new Subcommittee members who were not present for its last reauthorization. Expected to testify are the Association of Public Television Stations, National Association of Broadcasters, DISH Network and the Motion Picture Association of America.  Senate Commerce Committee. Also on Wednesday, February 13, the Senate Committee on Commerce, Science, and Transportation will hold an executive session to ratify Subcommittee assignments and to approve the Rules and Budget Resolution for the Committee.REGULATORY ACTIVITY  FirstNet. The Board of the First Responder Network Authority (FirstNet) will hold a public meeting on Tuesday, February 12, at the National Institute of Standards and Technology (NIST) in Boulder, Colorado. Although FirstNet board members were appointed in August 2012, they have only had two meetings. The meeting on Tuesday comes a week after the National Telecommunications and Information Administration (NTIA) announced the availability of $121.5 million in grants to help states, regions, local governments, tribes and territories plan for a nationwide public safety broadband network in the 700 MHz band that FirstNet will oversee. NTIA said that grant funds will be available to 56 states and territories in two phases. Grants will be available for phase 1, which will support planning, consultation, education and outreach; and phase 2, which will be dedicated to the collection of information on infrastructure and equipment that FirstNet could use as part of the nationwide network. Applications for grants are due March 19, and NTIA said it expects to award the grants by July 15.Contact InformationFor additional insights about likely policy developments, please feel free to contact the author of thissection: Jennifer Cetta at 202-457-6546 or Boggs Capital Thinking Weekly Update | February 11, 2013 16 of 16