Sure, the incoming Congress has big challenges ahead. But don’t be distracted by the bright shiny objects that are tax reform, entitlement reform, and maybe even gun control. There are some important issues for the U.S. economy and U.S. industries that could pop to the top of the agenda in 2013 and have widespread implications for Washington and the country.
Here’s a look at five of the sleeper issues for the 113th Congress.
FOSSIL-FUEL EXPORTS. Over the past few years, companies have been exporting refined oil products, like gasoline and diesel, as well as coal, at record levels. Natural gas will be the fossil fuel du jour in 2013 in the wake of the Energy Department giving an implicit nod to exporting the resource. Congress and the White House will likely take a backseat to this private-sector trend to export fossil fuels. But this year more than ever, the policy opportunity is there for the taking—if lawmakers want it. Congress could try to reform the Natural Gas Act of 1938, which restricts exporting natural gas, and also remove barriers to exporting crude oil, which right now faces a default ban in most instances.
EUROPE CRISIS. Remember that whole European sovereign debt thing? The hearings lawmakers held in 2011 about the risks to the United States from the crisis overseas now feel like a distant memory. Pressing domestic issues -- an election and the fiscal cliff -- commanded Washington’s attention and, economists believe, held back hiring and investment in Fall 2012. Next year, those business decisions may hinge much more on the global outlook. “Euroland ends 2012 in much worse shape than it ended 2011,” economists at High Frequency Economics said in a recent research note predicting a decade-long depression in the euro zone. Deutsche Bank, which was decidedly more upbeat in its forecast for Europe next year, also warned of a “false sense of security” surrounding the region. “The crisis is not resolved,” they said. Any flare-ups could roil markets and slow the U.S. recovery all over again.
K-12 EDUCATION. Education Secretary Arne Duncan essentially took away the impetus in Congress to deal with the public school system. By creating a waiver system for states that would be penalized for students' lack of achievement under No Child Left Behind, there is now very little reason to update the law. The White House made a decision to focus its attention on higher education, specifically financing college last year. Duncan is still in charge of the waiver program. But beyond that, states are basically on their own. (And for some Republicans, that's a very good thing.) At some point, Washington is going to have to reengage. State-by-state guidelines from the Feds can't replace a holistic approach to student achievement. States already are working on implementing the Common Core standards, which were negotiated by governors. If Congress doesn't keep up with them, the tension between federal funding and state practices could become too taut and snap.
TOO BIG TO FAIL. The battle to repeal the landmark 2010 Dodd-Frank financial reform law might have been over before it started, given the law’s public popularity. But the fight over whether certain mega institutions are still considered "too big to fail" rages on. The issue has become a populist point of contention, driving both the left and the right to argue more should be done to alter the financial incentives that reward the biggest banks. Take Sens. Sherrod Brown, D-Ohio, and David Vitter, R-La., for instance, who are typically opposed on political issues but have joined forces to keep pressure on this one. A slew of like-minded reform proposals keep popping up from often-disparate policy corners and incoming House Financial Services Committee Chairman Jeb Hensarling, R-Texas, has put the issue high on his agenda for 2013.
EPA’S CLIMATE CHANGE RULES FOR EXISTING POLLUTERS The Environmental Protection Agency set off a political firestorm in 2012 when it rolled out the first-ever regulations to rein in global warming emissions from industrial polluters, such as coal-fired power plants. The practical effect of those rules was muted, however: they only affected new facilities – not existing ones. Obama saved the big regulatory whammy for after the election: in the second term, the EPA is expected to roll out climate rules for existing industrial polluters – a move representing the most aggressive executive action Obama can take on global warming. That rule will require polluting industries to change the way they do business now – possibly leading to higher costs and facility shut-downs. The administration has given no indication on the timing, although it’s not likely to come until the economy shows more steady gains.