Introduction
With the Obama administration coming to an end, January 2017 marks the beginning of a dramatic wholesale conservative shift in federal public policymaking. Starting with the swearing in of the 115th Congress on January 3rd, and followed by President Donald J. Trump's inauguration on January 20th, the legislative and executive branches promise a robust schedule of activity heading into the Trump administration's first 100 days. Republicans are optimistic about their prospects for a productive legislative year; the GOP has not had undivided control of the federal government since they lost both chambers of Congress in the 2006 election cycle. The current balance of power in the Senate stands at 52 Republicans and 48 Democrats, with the House of Representatives at 241 Republicans and 194 Democrats. Since the election, Trump and GOP congressional leaders appear to have mended the hostilities that broke out during the campaign. This new found alignment bodes well, as Trump is likely to lean heavily on the policy expertise of congressional Republicans to carry out his anticipated public policy agenda. Leadership and members of congress have already set a bold and ambitious legislative plan for 2017. There will be a strong and targeted focus on rolling back dozens of regulations proposed and finalized toward the end of President Obama's term, as well as delivering top legislative agenda items. The policy areas discussed below are some of the top agenda items for the 115th Congress and the new Trump administration. Also included are issues and agenda items that have carried over from the previous Congress. Many of these issues, such as Trump's nominations, Obamacare repeal and replace, comprehensive tax reform and confirming a Supreme Court Justice are top GOP priorities and will be addressed within Trump's first 100 days in office. Other issues, like the debt ceiling and government funding, have hard deadlines and will have to be addressed early in the year. The remaining items may be considered later in 2017 or throughout the 115th Congress and Trump's first term.
Agriculture & Nutrition
Although the current farm bill doesn't expire until September 2018, lawmakers on the House and Senate agriculture committees will get an early start on the bill in the next Congress; passing the last bill proved to be a long and arduous process in 2014. During the last farm bill debate, lawmakers attempted to cut funding for the Supplemental Nutrition Assistance Program (SNAP) and pass it as a standalone bill, while keeping traditional farm programs in another. The Senate rejected that method and the farm bill was ultimately passed as a single measure. Senate Agriculture Committee Chairman Pat Roberts (R-KS) has said he wants to move a farm bill through his committee next year in order to have it pass through Congress before the 2018 midterm elections.
The next farm bill will likely have to make changes to crop insurance programs as farmers and ranchers have been beset by record-low commodity prices over the last few years. SNAP funding levels will continue to be an issue for fiscal conservatives. Roberts has also indicated that the committee will renew efforts early in the 115th Congress to pass a Child Nutrition Reauthorization bill that was not finished in the 114th Congress.
Other agriculture related policy includes the continued implementation of the Food Safety Modernization Act (FSMA). Although most of the regulations and rules from FSMA are expected to move forward as planned, there could potentially be a revived interest from congress and the new administration to review or revisit burdensome regulations on the agriculture industry.
Banking & Financial Services
Dodd-Frank and Regulatory Reform
The Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd-Frank, has been a target for reform by many in the financial community and by Republicans in both the House and the Senate. It will be a top priority in the 115th Congress. Since its passage more than six years ago, about 70% of the regulations of the Act required have been finalized; however, many are lagging and the promulgation of agencies that arose out of the Act such as the CFPB have been highly controversial. The Financial CHOICE Act (H.R. 5983), introduced by Chairman Jeb Hensarling (R-TX) and passed by the House Financial Services Committee, is the House Republican effort to replace many portions of Dodd-Frank but also strengthen other areas, such as financial fraud protections. Hensarling's bill is widely seen as a template for new regulation relief legislation in the 115th Congress. The Trump administration is largely expected to be supportive of any version of Hensarling's bill that makes it through Congress next year.
When drafting new legislation, Republicans may consider provisions like blocking or limiting the Department of Labor's fiduciary standard rule, raising the threshold for heightened banking supervision from $50 billion to $500 billion, repealing the Volcker rule, repealing the Financial Stability Oversight Council's authority to label non-bank financial institutions as systemically important financial institutions, and allowing banks that maintain a leverage ratio of 10% or more to be exempt from other capital and liquidity requirements.
Durbin Amendment
Another key target will be the Durbin amendment in the Dodd-Frank Act. The amendment capped the debit-card interchange fees retailers must pay to banks when a customer swipes a debit card. The Financial CHOICE Act would have repealed that portion of the bill. Although inclusion of a repeal of the Durbin amendment in a new regulatory relief bill next Congress is not guaranteed, there is enough demand for Republicans to possibly include it. While the Republican majority may help banking interests, the caps on fees will remain a contentious issue outside of partisan lines with retailers digging in to protect their 2010 victory. Durbin-style caps on credit card interchanges will also continue to be discussed among Democrats.
CFPB Reform
The Consumer Financial Protection Bureau (CFPB) was created by Dodd-Frank and any effort by congressional Republicans to substantially reform Dodd-Frank will likely include significant changes to the CFPB. Republicans, and a number of Democrats, want to change the CFPB's leadership from a single director to a five-member bipartisan board or commission, and to bring it under the congressional appropriations process rather than funded directly through the Federal Reserve. The House's Fiscal Year 2017 Financial Services Appropriations bill, for example, contained both of these modifications.
Moreover, the CFPB is facing legal challenges. In October, a federal appeals court ruled that the CFPB's structure is unconstitutional because it gives too much independence to the director. This case is now pending at the U.S. Court of Appeals for the District of Columbia; and the ruling may determine whether President-elect Trump can remove the CFPB's director, Richard Cordray, once he takes office.
Community Banks & Credit Unions
As Senator Mike Crapo (R-ID) assumes the Chairmanship of the Senate Banking Committee from Senator Richard Shelby (R-AL), one potential place of bipartisan agreement lies in regulatory relief for smaller community banks and credit unions. Should the Democrats have won control of the Senate, Ranking Member Sherrod Brown likely would have used this agenda item that he has openly supported as a way to strike a bipartisan tone within the committee. Shelby introduced reforms supported by each party during his chairmanship; however, they were attached to his larger Dodd-Frank Act repeal bill that could not pass through the Senate. Hensarling's Financial CHOICE Act included many of the community bank and credit union regulatory relief measures that the industry is requesting and would likely be included in a new bill in the next Congress.
The reforms requested and proposed cover regulations affecting the areas of safety and soundness, mortgages, as well as onerous supervision and enforcement requirements. Numerous proposals have been made over the course of the 114th Congress seeking to adjust different thresholds for regulations, dependent upon the assets that those banks hold and the activities they perform. For smaller banks with less than $10 billion in assets, numerous exemptions are sought, including from the Volcker Rule. Regional banks have also been pushing for a change to Dodd
Frank that requires banks that have more than $50 billion in assets to be subject to enhanced prudential standards. Other proposals for the easing of regulations on smaller banks range from exemptions from reducing executive bonus payments to expanding safe harbor for qualified mortgage liability protection.
Housing Finance
Housing policy will continue to be a topic of discussion in the new Congress, including the role of government sponsored enterprises, such as Fannie Mae and Freddie Mac. Chairman Hensarling signaled in the 113th and 114th Congresses his desire to see overhaul occur through the drafting and introduction of the PATH Act. However, the reform measures still need to gain broader support from the GOP before they can be advanced again to the House floor. The addition of a Trump administration and the continuing control of the Senate by Republicans, however, have increased the odds that housing finance reform will occur. It is unlikely, though, that this will be one of the immediate topics undertaken by the Trump administration and the 115th Congress, as Republicans face more pressing regulatory reforms in the areas of healthcare, taxes, trade and banking. The Trump administration will likely pursue administrative actions, seeking to lower regulatory burdens for real estate markets, developers, and rental housing.
Cabinet Nominations
Senate Majority Leader Mitch McConnell (R-KY) has said the Senate will begin to hold confirmation hearings for Trump's cabinet nominees soon after the start of the new session on January 3rd. Confirmation votes on cabinet members could come immediately after Trump's swearing-in ceremony. Early action on a large number of nominees will ensure a smooth and quick transition and will better help the new president start his first 100 day agenda. The table below lists the Cabinet and Cabinet-rank positions the Trump administration has announced as of Wednesday, December 21st.
Congressional Review Act
Congressional Republicans and President-elect Trump foresee the rollback of dozens of Obama's "midnight regulations" in the coming year. The regulations they will likely target impact a wide array of industries from banking and financials, to consumer products, labor, healthcare and education.
Congress may utilize the Congressional Review Act (CRA) to overturn major agency rules and regulations issued in the final months of President Obama's tenure. The rarely used oversight tool, which was successfully used only once to repeal a rule from President Clinton's term, allows Congress to submit a resolution of disapproval to overturn any final rule issued by a federal agency as long as the final rule has been received by Congress within a period of 60 "days-of continuous- session". In the new Congress, this 60 day period is reset after the 15th day of session in the Senate or House. By the start of the 115th Congress, this period stretches back to regulations issued on or after June 13, 2016, according to the Congressional Research Service.
A clear plan for using the CRA has not yet been defined. House and Senate parliamentarians will have to determine whether resolutions of disapproval must be submitted for each rule or if multiple rules can be combined into a package for a single vote. The House Freedom Caucus issued a list of over 200 regulations they want overturned. The Senate Republican Policy Committee released a list as well. Additionally, the Congressional Research Service put out a memorandum listing the major rules that Congress may consider using the CRA. However, even if a certain regulation is not addressed in a CRA, Republicans may still use the normal legislative process or appropriations riders to overturn a rule or block agencies from using funds to implement regulations.
Trump, on the other hand, will have three primary methods at his disposal to halt or eliminate Obama-era policies. First, using executive orders, Trump can immediately revoke, modify, or suspend other executive orders by his predecessor. Second, Trump can utilize discretionary agency directives and guidance documents to implement new policies or to withdraw old ones. One example of an agency directive under President Obama is the Department of Justice's non enforcement of federal marijuana laws in states that have legalized the drug for medicinal or recreational purposes. Executive orders and agency directives, however, do not require complex procedures and are thus easily changed from administration to administration. Third, an executive agency may issue a repealing rule or regulation. This method is often time consuming because it requires agencies to comply with the proper notice and comment process. Additionally, agency repeals are subject to the same standards of review as new rules. As such, an agency must demonstrate repeal of a rule is not "arbitrary and capricious," and must provide a reasoned analysis for the repeal if the repealing regulation is challenged by an injured party and brought to court.
Debt Ceiling
Addressing the nation's debt ceiling will be the first hard deadline that Congress and the Trump administration face next year. The current debt limit expires on March 16, but the Treasury can use "extraordinary measures" to keep the government afloat until next summer as it did in 2015. The current borrowing authority is capped at $20.1 trillion.
The last time Congress reached an agreement to raise the debt ceiling was in October of 2015, just before former House Speaker John Boehner resigned from office. Congress will undoubtedly have to raise the limit again to fend off a crisis. Republicans will likely use the opportunity to speak out against unsustainable government spending and the need for immediate budgetary and spending reductions. Intense spending debates preceded the 2011 and 2013 debt limit showdowns as well.
Education
On the campaign trail, Trump stated that he would drastically reduce the size of the Department of Education and return elementary and secondary education policy control back to the state and local levels. He has also said he would roll back several of the Department's regulations, such as the gainful employment requirement. Additionally, Trump and Republicans lawmakers will do want they can to roll back the Department of Labor's overtime rule, which universities and colleges across the country have said is burdensome and will increase costs for students seeking a higher education.
Betsy DeVos, Trump's nominee for Secretary of the Department of Education who currently serves as the Chairwoman for the American Federation for Children, is expected to support that agenda. That national advocacy group works to promote school choice along with the use of school vouchers. While it's clear from her background what DeVos' priorities for primary and secondary education are, it remains to be seen where she stands on higher education issues and if she will completely back Trump's promises of regulatory rollback.
Additionally, lawmakers and institutions of higher education are awaiting a long overdue reauthorization of higher education policy. Senate HELP Committee Chairman Lamar Alexander (R-TN) had hoped to complete a reauthorization of higher education legislation in the 114th Congress, but that effort was side-tracked by other legislative priorities. The House and Senate education committees held dozens of hearings throughout the last Congress related to higher education policy. The Senate HELP Committee also released a series of white papers focusing on accreditation, consumer information, and university involvement in lowering student loan burdens. Higher education legislation was last authorized in 2008. Additionally, Virginia Foxx (R-NC) will be the new Chairwoman of the House Education & the Workforce Committee. In the past she has supported amendments to ban the Department of Education from collecting data on individual students. She may support this ban as well as other conservative educational priorities in the future.
Energy & Environmental Policy
Although there was hope for a compromised energy policy bill to pass through in the 114th Congress in the lame-duck session, the issue will now be pushed to 2017. House and Senate energy policy negotiators worked on their respective packages for two years. Both chambers finally passed bills in the 114th Congress, but conference negotiators were unable to reach an agreement with enough time to get the bill through Congress this year. Although the conference report may be used as a starting block next year, Republicans will likely rewrite portions of the bill to boost support for fossil fuels and limit bill sections dealing with climate change. LNG export language, the Land and Water Conservation Fund, and forest management provisions were also major sticking points according to Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-AK).
Trump is expected to vigorously oppose the energy and environmental policies and regulations put in place by the Obama administration, especially the Clean Power Plan, the EPA's Waters of the U.S. rule, and ozone standards. On the campaign trail, Trump criticized the Paris climate agreement, though he has since softened his stance and may allow the agreement to stay in place. A Trump administration will also likely put an end to the EPA's work on methane regulations for oil and gas companies. Trump has appointed Oklahoma Attorney General Scott Pruitt to become Environmental Protection Agency Administrator. In this post, Pruitt is tapped to oversee the regulatory overhaul of the EPA. Pruitt's Senate confirmation promises to face vocal challenges from environmental organizations, left-leaning groups and Senate Democrats. Pruitt has been a vocal and legal opponent to the Obama administration's environmental agenda. His arguments against the agency's aggressive administrative actions were an underpinning of the Trump-Pence energy platform as Pruitt often referred to EPA regulations implemented during the Obama years as "unconstitutional, job-killing and costly." Additionally, Trump's pick to lead the Department of Energy, former Texas Governor Rick Perry, highlights an "all-of-the-above" approach to the nation's economic and energy issues, a mantra Trump has echoed in the past.
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