What Tuesday Means for New Jersey

There are only 18 Democratic governors left across the nation, and the survivors have some theories about why Democrats have been swept out of statehouses all over the country in recent years.

Many of the remaining Democrats are blaming an unpopular president.

In New Jersey on the other hand Democrats picked up four Assembly seats, widening their advantage to 52-28. The Senate is also controlled by Democrats.

State Republicans’ also have theories why New Jersey is bucking the national trend with remaining Republicans blaming an unengaged Governor Christie.

Overall, incumbents were widely re-elected to the Assembly with only a handful of Republican legislators losing to their Democratic challengers. Democrats picked up 4 seats bringing their total to 52, their largest majority in over 30 years. Republicans held onto 28 seats (down from 32). Below are brief summaries of races where at least one new individual was elected to the General Assembly.

–        First Legislative District: ATLANTIC (part) – CAPE MAY – CUMBERLAND (part) Counties

Republican incumbent Sam Fiocchi was defeated by Democrats R. Bruce Land. Democratic incumbent Bob Andrzejczak was re-elected.

–        Fifth Legislative District: CAMDEN (part) – GLOUCESTER (part) Counties

Democrats Arthur Barclay and Patricia Egan Jones handily defeated their Republican opponents, Kevin Ehret and Keith Walker. They will replace outgoing Democratic Assemblymen Gilbert Wilson and Angel Fuetes.

–        Eighth Legislative District: ATLANTIC (part) – BURLINGTON (part) – CAMDEN (part) Counties

Republican Joe Howarth joins his running mate incumbent Maria Rodriguez-Gregg in the Assembly. Both ran unopposed. Howarth is replacing retiring Republican Assemblyman Christopher Brown.

–        Eleventh Legislative District: MONMOUTH (part) Counties

Democrats Eric Houghtaling and Joann Downey narrowly beat their incumbent Republican competitors Mary Pat Angelini and Caroline Casagrande.

–        Sixteenth Legislative District: HUNTERDON (part) – MERCER (part) – MIDDLESEX (part) – SOMERSET (part) Counties

At the time of writing, Democrat Andrew Zwicker was leading incumbent Republican challenger Donna Simon by 29 votes, making it the tightest Assembly race. However, provisional ballots are still being counted, a process that will last until Friday November 6. From there, the losing candidate has until November 14 to file for a  recount. Republican incumbent Jack Ciattarelli was re-elected.

–        Twenty-Second Legislative District: MIDDLESEX (part) – SOMERSET (part) – UNION (part) Counties

Democrat James Kennedy was elected to replace retiring Democratic Assemblywoman Linda Stender. Democratic incumbent Jerry Green was re-elected.

–        Twenty-Fourth Legislative District: MORRIS (part) – SUSSEX – WARREN (part) Counties

Republican Gail Phoebus was elected to replace retiring Republican Assemblywoman Alison McHose. Incumbent Republican F. Parker Space was re-elected.

–        Thirty-First Legislative District: HUDSON (part) Counties

With no incumbents running for re-election in the district, Democrats Angela McKnight and Nicholas Chiaravalloti handily defeated their Republican opponents. They are replacing retiring Democratic Assemblymen Jason O’Donnell and Charles Mainor.

–        Thirty-Third Legislative District: HUDSON (part) Counties

Democrat Annette Chaparro was elected to replace retiring Democratic Assemblyman Carmelo Garcia. Incumbent Democrat Raj Mukherji was re-elected.

In terms of county elections below is a brief summary of newly elected individuals and ballot question results:

–        Atlantic County

Republican Maureen Kern was elected as the 2nd District’s Freeholder. The Republicans swept the elections in Atlantic County and were able to easily maintain their majority on the Board of Chosen Freeholders. Incumbents Dennis Levinson, James Curcio, Frank Formica, and James Bertino were re-elected.

–        Burlington County

Republicans Kate Gibbs and Ryan Peters were elected to the Board of Chosen Freeholders, defeating Democratic incumbents Aimee Belgard and Joanne Schwartz. As such, Democrats lost their majority on the board.

–        Camden County

Democrats Susan Angulo and William Moen Jr. join Democratic incumbents Jeffrey Nash and Jonathan Young Sr. on the Board of Chosen Freeholders. Camden also elected Democrat Gilbert “Whip” Wilson to the position of Sheriff, replacing outgoing Sheriff Charles Billingham.

–        Cumberland County

Newly elected Democrat James Quinn joins Cumberland’s Board of Chosen Freeholders. Incumbent Joseph Derella was re-elected. Overall, Democrats preserve their 4-3 majority.

–        Middlesex County

74% of individuals voted yes to the Public Question “Shall the governing body of the County of Middlesex prioritize funding to programs which provide transportation services for individuals in need of dialysis, chemotherapy or other regular medical services as a means of offsetting recent federal and state funding cuts?”

–        Morris County

Republican newcomers Christine Myers and Deborah Smith, and incumbent Republican John Cesaro were (re) elected to the Morris’ Board of Chosen Freeholders.

–        Passaic County

Democrats swept Passiac County’s Freeholder elections. Newly elected Cassandra Lazzara and incumbents John Bartlett and Hector Lora allowed Democrats to retain control of the board.

–        Salem County

Republican Melissa DeCastro and Democrat Charles V. Hassler remain in an extremely tight race, with DeCastro leading by 11 votes. At the time of writing, provisional ballots were being counted. Regardless of the outcome of this race, Republicans will retain control of the board.

So, the New Jersey Legislature now enters a lame-duck session after this week’s elections with several key questions still needing to be answered.

Among them: – Funding the New Jersey Pension- Horizon Blue Cross Blue Shield Omnicre- Out-of-Network, and most critically– Funding for the Transportation Trust Fund.

Serious conversations about raising New Jersey’s gas tax to head off a looming transportation-funding crisis were put on hold earlier this year, so lawmakers could focus on the Assembly elections that were just held in all 40 legislative districts earlier this week. But now with those contests in the rearview mirror, the talk in Trenton has shifted back to transportation.

Lawmakers from both parties said yesterday that they are willing to strike a bipartisan deal to renew the state’s Transportation Trust Fund, which pays for road, bridge, and rail improvements throughout the state, using revenue from the gas tax and other sources, including from borrowing.

The lawmakers also seem to be in agreement that any deal they strike on transportation funding will likely have to involve raising the state’s 14.5-cent gas tax to bring in new revenue, since all of the money coming in from the gas tax is going to pay down debt. The trust fund is also up against its borrowing limit and only has enough money to make it until the end of June 2016.

There are also signs of hope that lawmakers in the Senate, which is also controlled by Democrats, will find common ground on the transportation-funding issue as well. They recently came together to pass a resolution supporting a plan to share costs with the federal government on a new Hudson River train tunnel. But how to convince Christie, who has signed an anti-tax pledge as a GOP presidential candidate this year, to agree to a tax hike in the middle of his presidential campaign remains a big concern. When the issue came up during his monthly call-in radio show on NJ 101.5 FM earlier this week, Christie was noncommittal, saying only that he hasn’t dismissed a gas-tax hike outright.

Lastly, the State must deal with Governor Christie’s Cabinet/Staff Changes that include:

  • Richard Badolato was formally nominated as Commissioner of the Department of Banking and Insurance. He has served as Acting Commissioner since August of this year.
  • Ford Scudder, COO of Laffer Associates, will be nominated to the position of State Treasurer. Current Acting Treasurer, Robert Romano, will be responsible for management and operation of Treasury activities.
  • Richard Hammer, Assistant Commissioner of the New Jersey Department of Transportation, will become that department’s Acting Commissioner. He replaces Jamie Fox.

With it all, there remains the question of how committed Christie will be to solving New Jersey issues as long as he remains in the hunt as a presidential hopeful. Christie is pushing in New Hampshire, where the primary is not held until February.

Martin J. Milita, Jr. Esq., is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

Visit his blog at: https://martinmilita1.wordpress.com

Follow him on twitter: @MartinMilita1




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Senate Passes 2016 Budget in a “vote-a-rama.”

Senators voted 52-46 on the fiscal year 2016 budget resolution after a nearly day-long session that began Thursday morning and stretched well into early Friday, with lawmakers considering more than 50 individual amendments and a package of noncontroversial measures, part of a process colloquially known as the “vote-a-rama,” following three previous days of debate in which senators had agreed to 11 proposed amendments.

Among the nearly 30 amendments approved by senators on Thursday and Friday were measures to roll back the estate tax and provide “middle class tax relief,” as well as a pair of amendments seeking to block a carbon tax and removing a block on highway funds for states who don’t submit implementation plans for proposed U.S. Environmental Protection Agency regulations.

Democratic lawmakers saw several of their proposed amendments pass, including a proposal to expand access to paid sick days for workers, as well as a measure seeking to recognize same-sex marriage for the purposes of Social Security and veterans’ benefits, with 11 GOP senators joining the minority in that vote.

The rejected measures included two proposals to increase defense spending beyond the increases already set out in the budget, a measure to increase the federal minimum wage, and moves to cut clauses written into the resolution that would slash more than a trillion dollars in federal Medicaid and Medicare funding over the next decade.

Further, senators rejected a bid to close purported tax loopholes related to “offshoring,” presumably to leave the proposal for a more comprehensive tax reform effort.

The Senate’s final vote came after the House of Representatives on Wednesday approved its own proposed budget plan in a largely party-line vote, after a single day of debate which saw it consider only a limited series of proposed amendments, including alternative budget plans put forward by progressive and conservative caucuses.

House lawmakers took up only one amendment, proposed by House Budget Committee Chairman Tom Price, R-Ga., seeking to remove the requirement that $20 billion of $613 billion in proposed defense funding be made contingent on finding offsets elsewhere in the budget — publicly criticized by several GOP lawmakers as making that funding effectively illusory — and then adding an additional $2 billion in defense funding.

The Senate budget plan provides about $1.16 trillion in discretionary funding for FY16, with mandatory funding bringing total spending up to around $3.8 trillion.

Over the long term, it seeks to eliminate the federal deficit and reach a planned surplus in 2025, through about $5.1 trillion in spending cuts spread across a variety of both discretionary and mandatory federal programs — including the full repeal of the Affordable Care Act — with the exception of defense spending, which would be ramped up.

The House plan is similar, although more aggressive in its planned cuts and intended timeline to eliminate the federal deficit, with $5.5 trillion in planned cuts to reach a surplus beginning in 2024.

While the two chambers’ budget plans — which are subject to further reconciliation — do not actually implement any specific spending measures, they are meant to be used by appropriators as a guide when setting down FY16 appropriations bills later this year.

Senate Passes ‘Clean’ $40B DHS Funding Bill

Today the U.S. Senate passed a “clean” $39.7 billion bill funding the U.S. Department of Homeland Security through 2015 after earlier resolving an immigration-related impasse, as the House of Representatives sought to buy more time for debate with a short-term DHS funding measure.

Senators voted 68-32 on the passage of H.R. 240, which will fund DHS through to the end of fiscal year 2015, after voting in favor of an amendment stripping out disputed language which would have defunded implementation of contentious recent immigration-related executive actions, as agreed under a bipartisan deal hashed out earlier in the week.

Following the vote on the DHS funding bill, senators rejected a cloture motion on proceeding to official debate on a separate bill regarding the executive actions, S. 534, the Immigration Rule of Law Act, falling just short of the necessary 60 votes to proceed, in a 57-42 vote.

With the Senate agreeing to the clean bill, the fate of the agency’s funding is now in the hands of House lawmakers, who had in January passed the funding bill with the immigration “rider” attached.

Some House lawmakers have publicly expressed reluctance to take on a funding bill without the immigration clause attached, and on Friday House leaders sought to buy time for further discussion on the legislation, beginning debate on a continuing resolution, or CR, extending DHS’ current temporary funding — set to expire at the end of the day on Friday — through to March 19.

The House will also seek to convene a panel to go to conference with the Senate to hash out their differences over the bill, which may lead to another stand-off, with Senate Democrats — having filibustered the legislation until the dispute clause was removed — having publicly indicated they will not support anything other than a clean bill.

DHS, the parent agency of subagencies including U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement, was the only agency that did not receive full-year funding in December’s “cromnibus” appropriations bill, amid the dispute over President Barack Obama’s executive actions.

Under those executive actions, estimated to cover about 4.4 million undocumented immigrants, certain unlawful immigrants who are the parents of lawful residents would be granted temporary deportation amnesty and limited work privileges, after passing a necessary background check.

The Deferred Action for Childhood Arrivals program, which covers certain undocumented immigrants who came to the U.S. as minors, would also be expanded by removing its age cap and lengthening a deportation deferral under the program to three years.

In addition to the ongoing fight over the actions in Congress, the disputed actions have also been the subject of a court challenge, brought by 26 states in Texas federal court. The judge in that suit, U.S. District Judge Andrew S. Hanen, has issued a temporary injunction against the actions going into effect, which the federal government has asked him to stay.

“Is Congress an endangering species?”

For businesses hoping to have an influence on the course of regulation, much of the action has moved from Congress to the executive branch. The last few years have seen an expansive exercise of federal power through the issuance of new regulations, the reinterpretation of existing ones, and the enforcement of both, as well as more novel regulatory approaches. The trend shows through in virtually every regulatory area, and it looks likely to continue through 2015 and beyond.

On the one hand, the Obama administration is proud of its assertive approach, pointing to progress even in the face of what it calls a “do-nothing” Congress. By contrast, congressional Republicans — and some constitutional scholars — have accused the administration of regulatory overreaching.

But one thing seems certain about this new wave of administrative activism: it spells new headaches for business.

More regulation means more compliance costs and challenges. More aggressive enforcement means harsher penalties and more intrusive sanctions for failure to comply. And more key decisions being made by the executive branch — rather than by Congress or the courts — means businesses have to be even more focused and strategic to make their views known and influence the outcomes.

Federal agencies have been testing the limits of their statutory authority. Like the president, agency leaders also see themselves as taking up the mantel that Congress dropped.

For example, no major environmental statute has undergone a major reauthorization since the 1990s. In the meantime, new environmental challenges — greenhouse gases, new findings about substance toxicity, and the like — have emerged. In some cases, there is broad agreement — among stakeholders, if not in Congress — that revisions are needed because the laws as currently written cannot be interpreted to address these newer concerns.

As the number and scope of administrative rules multiply, so do the penalties for non-compliance. If just measured in fines alone, these penalties are rising fast: more than $13 billion in 2014, up from about $7 billion in 2013, according to economist Brandon Garrett at the University of Virginia. (In 2008, the figure was closer to $2 billion.) And, in the realm of consumer protection, for example, the Federal Trade Commission has been increasingly willing to go to court to seek monetary damages or consumer redress rather than settling for an injunction- blocking future non-compliant behavior.

Moreover, enforcement actions are increasingly resulting in much more than a fine and an order to stop the violations. Prosecutors are demanding deep and very specific changes in management and embedding monitors in the company to ensure that they occur. Settlements are requiring corporate policy changes, staff training, remedial community training programs, and more.

Additionally, companies facing even the threat of enforcement actions have allowed regulators to influence their policies in new ways. For example, after a safety crisis, General Motors signed an accord with the National Highway Traffic Safety Administration in which it agreed to implement training policies that expressly disavow statements diluting the safety message in internal communications. The move is part of a growing trend of agencies trying to change corporate culture.

In another case, the Consumer Product Safety Commission is calling on retailers to pull products from their shelves when the agency cannot convince manufacturers to recall them. Retailers are increasingly willing to go along; now that the commission’s civil penalty cap has increased from $1.8 million to $15 million.

Regulators are also becoming more aggressive in their efforts to root out alleged misdeeds, largely through efforts to recruit insiders. For example, in 2013 the government enhanced whistleblower protections for employees of government contractors and extended the protections to subcontractors. When coupled with significant awards afforded to whistleblowers, the protections amount to deputizing the workers of America to blow the whistle on their employers and act as a partner in enforcement.

The recent regulatory expansionism will continue through 2015 — and likely beyond — thanks to a striking confluence of events.

  • Firstly, the third year of a president’s term tends to be the most aggressive in terms of policymaking. Midterm elections are over, political appointees are firmly in place, and the administration is acting with its legacy in mind. By contrast, in 2016, the administration may face pressure to pull back on rulemaking for the sake of pre-election politics or transitional smoothing.
  • Secondly, the 2013 decision by Democrats to strip Republicans’ ability to filibuster the president’s nominees has resulted, for the first time in a decade, in a federal appeals bench — including the all-important D.C. Circuit — in which judges appointed by Democrats considerably outnumber Republicans. These judges are generally thought to be more receptive to the regulators in legal challenges to the administration’s authority.
  • Thirdly, a U.S. Supreme Court ruling in 2013, City of Arlington v. FCC, appears to give agencies wide discretion in deciding the scope of its statutory authority. Arlington continues a tendency running back 30 years for courts to defer to agencies when there is ambiguity about whether the agency is allowed to act under its authority established by Congress. As a result, unless Congress clearly mandates otherwise, agencies can expand their authority as far as they see fit. And since their statutory authority tends to be quite broadly stated, agencies have a lot of leeway.

Companies struggling with compliance do have a range of options, however.  As they devise their compliance strategy, companies may want to seek guidance from agencies on how their rules might apply to them; seek waivers, exceptions and mitigating guidelines; and develop sound policy reasons to have the agency construe its rules in a manner that achieves the regulatory goal but is less onerous for a company.

Congress still has a role to play in affecting an industry’s regulatory burden. For one, a legislator can write letters or hold hearings in an attempt to influence agencies on important issues. Congress can constrain agency actions by appropriations riders or budgetary restrictions. And legislative wins are still possible for companies that can find issues that can be agreed by both sides of the aisle as job creators.

It is more important than ever to build and sustain relationships with relevant agencies. That means interacting with them regularly and educating them about issues important to your industry. The goal is to build your reputation and their comfort level well before any sensitive issues come up, such as potential enforcement actions or proposed regulations you want to fight.

As in the case of agency leaders, it’s important for companies to establish ongoing relationships with relevant members of Congress, rather than reaching out only when they need something from them.

House Sends Keystone Approval Bill To President Obama

The U.S. House of Representatives on Wednesday passed a bill that would force the federal government to approve TransCanada Corp.’s controversial Keystone XL oil pipeline, a move President Barack Obama has warned he will Veto.

Republicans in the House with some Democratic support pushed through the bill, that the Senate passed two weeks ago. The Senate’s road was much tougher, with the passage process drawn out as Democrats fought unsuccessfully to stall it. As the Keystone bill now now heads to Obama’s desk, it is doubtful the Senate will be able to muster the 67 votes needed to override the president’s veto.

The measure passed by a 270-152 vote, with 29 Democrats joining 241 Republicans in voting for passage and one Republican joining 151 Democrats who opposed it.

Obama has based his opposition to the pipeline on a variety of issues, including state court litigation and the U.S. State Department’s ongoing review of TransCanada’s application.

Comments from various federal agencies recently have been submitted to the State Department, including from the U.S. Department of Defense, which said it has no problems with the pipeline. The U.S. Environmental Protection Agency, however, said the State Department should reconsider its supplemental final environmental impact statement. And the State Department previously found that approving the pipeline would not have much of an effect on GHG emissions.

The Keystone bill dominated the first few weeks of the new Congress and prompted a wide-ranging discussion of its benefits and drawbacks. Before the Senate voted, it took up a dozen amendments to the legislation, passing only one concerning energy retrofitting for schools. Democrats had refused to end debate on the bill until all pending amendments had been voted on.

Some of the other failed amendments included removing land from consideration as wilderness areas unless Congress acts on them within a year; campaign finance disclosure requirements for companies that stand to make more than $1 million from the tar sands; removing the lesser prairie chicken from the threatened species list and speeding up the approval process for liquefied natural gas exportation to World Trade Organization members.

Keystone XL is intended to carry tar sands crude oil from Alberta, Canada, to the Gulf Coast, with a southern 485-mile portion of the proposed span running from the crude market hub at Cushing, Oklahoma, to refineries near Port Arthur, Texas, having already been approved.

The pipeline still faces a snag in South Dakota, where a project permit expired last June. TransCanada is currently pursuing a recertification of the permit but has been met with firm opposition by local environmental and community groups.


Legislation giving the go ahead to the Keystone XL pipeline moved closer to the president’s desk on Monday night, as the Senate voted to commence debate on the bill to approve the massive project that has been in limbo for more than five years.

The Senate voted 63-32 to advance the bill to the floor, clearing the 60-vote cloture hurdle for a bill that would bypass White House review of the controversial TransCanada Corp. pipeline. A floor vote on the bill could come as early as this week. (Cloture -Rule 22–is the only formal procedure that Senate rules provide for breaking a filibuster. A filibuster is an attempt to block or delay Senate action on a bill or other matter. Under cloture, the Senate may limit consideration of a pending matter to 30 additional hours of debate).

The House of Representatives passed its own Keystone approval bill on Friday by a comfortable 266-153 margin. Twenty-eight Democrats joined all but four of the House’s 242 Republicans in voting yes.

The companion bill in the Senate has 59 co-sponsors, including Democrats Mark Warner of Virginia, Jon Tester of Montana, Claire McCaskill of Missouri, Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia.

The Senate Keystone bill is moving with lightning speed through the chamber. It was the first bill introduced during the new session last week, and will likely be sitting on the president’s desk in a matter of days.

President Barack Obama has pledged to veto the bill once it reaches his desk. The Senate would need 67 votes to overcome a presidential veto.

The project had been held up by a court challenge in Nebraska, but that state’s Supreme Court last week upheld the state’s approval of the Keystone route through the state. The decision removes a roadblock frequently cited by President Obama as part of his hesitation to sign a bill approving the project.

The pipeline will carry tar sands crude oil 1,700 miles from Alberta, Canada, to the Gulf Coast. TransCanada has already secured the necessary permits for the 485 miles of the pipeline running from the crude market hub at Cushing, Oklahoma, to refineries near Port Arthur, Texas, after deciding to split the lower segment from the more contentious northern route that runs into Canada.

TransCanada submitted its original permit application in 2008. The company agreed in 2011 to consider alternative routes for the pipeline after the Nebraska Legislature passed a law requiring it to build around a major aquifer in the state.

The White House still rejected TransCanada’s initial bid in 2012, following controversy over a congressionally imposed deadline to act on the company’s request. But he left the door open for TransCanada to reapply and has expedited the new review of the project. The U.S. Department of State concluded last year that the project is unlikely to increase the rate of oil sands drilling or heavy crude demand significantly, but the U.S. Environmental Protection Agency has criticized the conclusions as not giving enough consideration to alternative pipeline routes and relying on outdated energy-economic modeling.

Obama has said he would approve the pipeline only if it does not “significantly exacerbate the effects of carbon pollution.”

Major Policy Developments for the 114th Congress: appropriations/budget

Major Policy Developments for the 114th Congress: 

Many challenging issues await the 114th Congress. In the pages that follow we will attempt to give you a sense of what potentially lies ahead; we will sketch out our sense of what is in store in the areas of appropriations and budget  matters, defense and national security, energy and the environment, financial services , food and agriculture policy, healthcare, homeland security and cybersecurity, international policy issues, tax, technology and telecommunications, trade, and transportation and infrastructure.


The recent bipartisanship on budget issues will be tested early in the 114th Congress. Another financial cliff looms in 2015 as the nation’s borrowing authority will lapse in late spring/early summer, requiring an increase in the debt  limit, and sequester-level budget caps are scheduled for reinstatement in FY 2016, which begins on October 1, 2015. The debt limit is the total amount of money that the U.S. Government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefit  military  salaries, interest on the national debt, and tax refunds. Congress must increase the nation’s debt limit periodically.  Failure to increase the debt limit would cause the government to default on its obligations, something the United States has never done. The debt limit has been addressed nearly 80 times since 1960, most recently in February 2014, when it was extended through March 15, 2015. This is a soft deadline, as the Department of Treasury typically employs “extraordinary accounting measures” to further extend the limit. Treasury has indicated that the current extension wills be sufficient until summer.

Sequestration is the “poison pill” included in the Budget Control Act of 2011 (BCA) that imposed discretionary spending caps through 2021 to achieve $1.2 trillion in deficit reduction required to offset an increase an increase in the debt limit. This provision was included in the BCA as a way to incentivize the Joint Committee on Deficit Reduction, also established through the BCA, to develop a compromise deficit reduction plan. The failure of the Joint Committee to come to a bipartisan agreement forced the implementation of sequestration in FY 2013, ultimately resulting in an eight percent reduction in defense discretionary funding and a fi percent reduction in non-defense discretionary funding for that fiscal year. The BCA also identified specific topline funding levels for defense and non-defense programs through 2021.

The FY 2016 budget process will commence this spring with the submission of the President’s Budget Proposal to Congress, in which he is expected to propose higher discretionary spending caps than those mandated by the BCA. The Senate and House Budget Committees will also work on preparing a budget resolution for FY 2016. A budget resolution represents an agreement between the House and Senate on a budget plan for the upcoming fiscal   year and several years going forward. A budget resolution is considered “concurrent” once it is agreed to by both the House of Representatives and the Senate, but is not enacted into law; rather, it serves as the framework for subsequent budget- related legislation.

If Republicans can work through philosophical fiscal differences within their own party, they should be able to approve a budget resolution for FY 2016, a component of the federal budget process that has been lacking for the past four years. The Senate requires a 60-vote threshold to end debate and advance legislation; hence, despite holding a slight majority, this requirement may limit the ability of Republicans to advance budget legislation that is too austere. Incoming Budget Committee Chairmen Senator Jeff Sessions (R-AL) and Representative Tom Price (R-GA) both share current House Budget Committee Chairman Paul Ryan’s vision to achieve a balanced budget within 10 years, although they may forgo some of Ryan’s more controversial methods, such as the privatization of Medicare, in order to secure sufficient  Republican support in the Senate. (Ryan’s most recent budget proposal received only 41 Republican votes in the Senate.) Both chairmen have stated they believe the BCA-mandated spending cap is the ceiling for FY 2016 discretionary spending.

A budget resolution can also include reconciliation instructions that direct certain committees to recommend changes to laws impacting revenue or spending within their jurisdiction that would be required to implement the proposals outlined in the budget resolution.  In addition to discretionary spending, reconciliation can incorporate revenue, entitlement reform, and debt limits provisions, as long as the measure does not increase the long-term deficit. Budget reconciliation requires only a simple Senate majority, allowing the majority party to bypass the typical 60-vote threshold to pass budget-related legislation. The reconciliation process was last utilized by Democrats in 2010 to help pass healthcare reform. However, lacking the necessary two-thirds majority to overcome a presidential veto, the use of reconciliation could backfire on Republicans, as it did in the mid-1990s when President Bill Clinton vetoed a reconciliation bill and congressional Republicans were blamed for the resulting government shutdown.

Big changes in Lobbying from Big Changes in Congress


Big changes in Lobbying from Big Changes in Congress:

With the Republican Party taking the U.S. Senate on Tuesday, lobbying dollars will shift to areas such as health and energy to reflect GOP priorities says Martin Milita of Duane Morris Government Strategies. The Republican Party won control of the U.S. Senate in Tuesday’s midterm elections, taking seats held by Democratic incumbents in several key battleground states to secure the majority after holding onto and increasing its presence in the the U.S. House of Representatives earlier in the evening.

The GOP had needed to reel in six seats to retake the Senate following eight years of Democratic control, and by late Tuesday had done just that in Arkansas, Colorado, Iowa, Montana, South Dakota and West Virginia to push them to victory.

Expectations that the next Congress may have a hard time getting legislation passed because of the “threat of a White House veto, or may otherwise pursue an unambitious agenda”, should see lobbying spending shift away from routine “monitoring and reporting” efforts; “ lobbyist will rather focus on winning support for major projects and legislation, resulting in a potential boon for established, well-connected firms”, Milita said.

This will include large law firm lobbying arms, such as Duane Morris Government Strategies. Duane Morris Government Strategies professionals have worked for members of Congress, congressional and state committees, and presidential and gubernatorial transition teams. Also at Duane Morris Government Strategies disposal are hundreds of seasoned attorneys from the Duane Morris law firm who have handled complex legal issues in the public and private sectors across a multitude of industries.

“Particular industries, such as the energy industry and the defense industry, could also ramp up their spending to reflect perceived and stated GOP legislative priorities- like pressing for approval of the contentious Keystone XL crude oil pipeline” says Milita.

Milita went on to say, “Health care companies are especially likely to drive a tremendous amount of activity under a GOP-majority Senate, with likely Senate Majority Leader Mitch McConnell, R-Ky., expected to support a push to revisit aspects of the Affordable Care Act”.

DMGS clients’ included retailers and manufacturers, professional associations, municipalities, health care and pharmaceutical companies, transportation and oil companies, universities, and financial services firms, many of them in the top echelons of their respective industries.

According to Milita, the change in Senate majority is the sort of “realigning election” that typically ushers in an increase in lobbying spending in general, with both Republican and Democratic incumbents continuing to see significant lobbying spending directed at them. Meanwhile, lobbying firms and their clients will also be reaching out to newly elected senators, Milita says.

“It’s an great opportunity for those who get in first to communicate with new members,” he said.

More importantly, lobbying clients will seek to direct spending to secure or reinforce ties with new committee and caucus leaders, who hold significant influence over the legislation that will reach the Senate floor — efforts that in some cases can be like “starting anew,” Milita said.

“This is a fundamental change … clients have to start all over again in trying to establish relationships,” he said.

Despite some anti-lobbying rhetoric from the Obama administration, congressional lobbying spending has remained at a relatively stable, high level for a number of years, after ramping up during the 2000s, according to Allard.

Total federal congressional lobbying spending has remained about $3.3 billion for each of the past three years, after peaking around $3.5 billion in both 2009 and 2010, according to figures collated by the Center for Responsive Politics from Lobbying Disclosure Act-mandated filings. Spending first jumped to about $3.3 billion in 2008, from just under $2.9 billion in 2007, following a decade of steady year-on-year increases.

The largest industry sector for congressional lobbying spending in 2013 was finance, insurance and real estate, at just under $490 million, with the health industry close behind at a little more than $487 million. Communications and technology firms were next on the list, spending close to $394 million. Energy and other natural resources firms spent just more than $359 million, outspending the next nearest industry — transportation — by more than $130 million, CRP-collated figures show.

While its overall spending levels and relative positions within the group have changed over the past decade, this group of four industries has remained, as a bloc, the biggest lobbying spenders over that period.

But even these lofty figures don’t capture the full picture, Milita said. With much legislation around the world now having cross-border impacts, the increasing globalization of advocacy efforts is one of the most fundamental recent changes to the lobbying industry, and it is not reflected in federal LDA filings, the usual tracking tool, he said.

“The fact is, a lot is spent on lobbying, and that will continue,” he said. “The demand for expert advocacy will continue as government’s influence on our lives continues.”

Two Vastly Different Outcomes: control of the Senate

While there’s no presidential race this year, the upcoming election has the potential to send a shockwave: control of the Senate is very much up for grabs on November 4, and Republicans need just six seats to gain the bare majority of 51 (if they get 50, Vice President Biden can break the tie). Currently, most experts say there’s a 60% chance of Senate control changing hands… and a Republican Senate, combined with a Republican House, could mean a substantial shift in economic policy.

Two Vastly Different Outcomes:

For example, Let’s take a look at how both a Republican- and Democrat-controlled Senate would affect investors…

If the Republicans win control of the Senate, monetary policy will become tighter. Most (though not all) Republicans want a tighter monetary policy than the Democrats, and Republicans worry about the effects of the monetary “stimulus” of the last six years.

Of course, Janet Yellen, in office until at least January 2018, will remain in charge of the Fed. However, the Senate must confirm new Fed Governors, so the monetary hawks on the Federal Open Market Committee will be strengthened over time. More importantly, Janet Yellen must appear before Congress twice yearly; with Republicans in charge in both houses, she’ll probably trim policy towards their preferences.

Meanwhile, the current economic recovery is already five years old, and the stock market has risen over 100% since 2009. Mathematically there must be a significant chance of a market crash and accompanying recession before the 2016 elections therefore. If a crash is bound to occur, the Republicans, hoping to blame any trouble on President Obama, would want it to happen before the election. Conversely, with a Democrat Senate, Yellen’s own preference for loose money will be given free rein. My guess is, in that case, interest rates will rise very little – if at all – before the 2016 elections, and we may see a further burst of “quantitative easing” bond purchases. That would prolong the economic recovery as far as possible, something the Democrats want to ensure leading up to the 2016 election. Two more years of expansion and increasing employment before the election would make President Obama’s economic record look stellar, since he took over in a downturn.

A Republican Congress:

Should the Republicans win, as is currently predicted, Congress is likely to make some significant policy changes. A Republican Senate won’t be able to push Republican policies over President Obama’s opposition – there will be no repeal of Obamacare, for example – but combined with a Republican House, it’ll be able to push the debate on issues such as public spending in its direction. A Republican Senate would likely work to reduce the budget deficit from its current $486 billion – at least while the current expansion continues – rather than allowing it to increase, as the Congressional Budget Office currently predicts.

Conversely, defense spending would increase rapidly under a Republican Senate. In fact, Republicans have already expressed unhappiness with the sharp rundown caused by the “sequester” deal last year. Furthermore, a Republican Senate would likely try to close the U.S. Eximbank. This institution has come under considerable fire as an example of “crony capitalism,” lending taxpayer money at concessionary rates to foreign governments with poor credit ratings.The Eximbank has its supporters within the Republican Party – large companies such as Boeing (BA) and General Electric (GE)benefit hugely from it, for instance – but if leadership wanted to give some red meat to the party’s ideological base, closing the Eximbank would be an obvious gesture.

Finally, on taxes, a Republican Senate is likely to move towards reforming the tax system by closing loopholes in both personal and corporate taxes and lowering the corporate tax rate. This would benefit companies currently paying close to the full nominal rate of 35%, while hitting companies such as GE that pay little tax.

Post-Election Markets:

If the Republicans win, look at major defense contractors (but not Boeing, which depends on U.S. Eximbank). As discussed above, a Democrat Senate will attempt to keep interest rates as low as possible for as long as possible, and Fed Chairman Janet Yellen is temperamentally inclined to go along with them.

Government Affairs Firm, Duane Morris Government Strategies (DMGS) Development Finance Consultants, devise tailored plans for clients that enable proposed development plans to become successful projects. DMGS has specialized project experience in commercial real estate development, municipal infrastructure, historic preservation, transit oriented development, green building, affordable housing and the associated economic development programs.

Author Martin Milita, worked with Lockheed Martin on approval of a $40 million “Grow NJ” grant through the New Jersey Economic Development Authority (NJEDA) for new machinery and equipment as well as modifications to Lockheed Martin’s Aegis testing facility located in Moorestown, NJ, which employs approximately 4,000 people. A condition of the NJEDA award was Lockheed winning the Aegis contract. The U.S. Navy awarded Lockheed Martin the 5-year, $100 million contract to provide combat system engineering services – including the design, development, integration, test and life cycle support – for all Aegis-equipped ships.