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Fireworks Expected Before The Recess

Lawmakers face several issues this week that might cause fireworks, even as they look to clear the legislative docket and leave for the Independence Day recess.

The Senate is expected to vote as early as today on a bill rewriting the nation's electronic surveillance law that the House passed Friday.


The bill was put forward last week as the best deal available on rewriting the Foreign Intelligence Surveillance Act after months of talks.

The bill was crafted by House and Senate lawmakers from both parties and was approved in the House, 293-129.

Significantly, it would let a federal district court determine if lawsuits against the companies should be dropped.


The bill would require the court to dismiss lawsuits if there is "substantial evidence" the companies received written orders from the administration that such warrantless surveillance was legal.

Critics say the companies were given such orders, meaning the lawsuits are certain to be dismissed.

Senate Majority Leader Reid is expected to try to strip the immunity provisions, according to his spokesman, setting up a key test of the strength of the House deal.

The bill would require the administration to submit its surveillance procedures to the secret FISA court for approval before surveillance could begin, except in exigent circumstances.


Several senators are expected to oppose the bill, including Judiciary Chairman Patrick Leahy and ranking member Arlen Specter.

Other key senators will support it, including Intelligence Chairman John (Jay) Rockefeller and ranking member Christopher (Kit) Bond.

The White House has indicated it will sign the bill. Its provisions expire at the end of 2012.

Meanwhile, the Senate is set to pass its housing-rescue package this week, setting up negotiations with the House on a few disputed items.

Reid filed cloture on the legislation Friday, setting up a Tuesday vote. Votes on amendments last week indicated strong bipartisan support.

The measure, by Banking Chairman Christopher Dodd and ranking member Richard Shelby, would revamp oversight at government-sponsored enterprises Fannie Mae and Freddie Mac, overhaul the Federal Housing Administration's mortgage insurance program, and allow the FHA to guarantee up to $300 billion in new loans for subprime borrowers. It also would provide about $14.5 billion in housing tax breaks.

House Financial Services Chairman Barney Frank said the Senate bill is not that far apart from a House-passed version, but he has a few issues he wants to press: allowing Fannie and Freddie loan limits to be higher than $625,000 in some high-cost areas; providing more ability for the GSEs to hold more jumbo loans in their portfolios, and requiring that the new oversight system for the two and the Federal Home Loan Bank System starts six months after enactment.

The Senate is expected to consider a war supplemental spending package, on the heels of a resounding House vote in favor of it.

The House package was the product of an agreement between House leaders and the White House. The question remains whether the Senate will pass the bill unchanged or include more spending for Senate priorities.

"We've sent what we are going to do," House Speaker Pelosi said Friday.

President Bush also weighed in Friday, urging the Senate to follow the House lead: "I want to thank the members of Congress for their action on this legislation, and I urge the Senate to pass it as soon as possible."

But Reid was keeping his cards close to his vest last week. "We'll just have to wait and see," he said. "Individual senators will have to make a decision on what to do on this."

No decisions are expected on a strategy until Senate Democratic leaders meet Tuesday, according to a Democratic aide.

Prior to House action, Democratic leaders in the House and Senate held open the possibility Congress could draft a second supplemental.

"We have to look at a second package," said Sen. Patty Murray, D-Wash., citing natural disasters and the economic downturn.

House Appropriations Chairman David Obey agreed a second supplemental is warranted.

"People use all kinds of terminology; I don't care if you call it a second supplemental or a second economic [stimulus] package," Obey said. "To me there are all kinds of things that we need domestically ... but we need to finish this job before we can start thinking about the next one."

The House package is made up of two amendments. The first includes nearly $162 billion for the wars, which will cover the rest of FY08 and part of FY09.

The second includes a boost in veterans' education benefits that is not offset. The amendment includes a 13-week extension of unemployment benefits and $2.65 billion for flood-ravaged communities in the Midwest and other disaster recovery.

Over in the House, the chamber will take up an 18-month Medicare physician payment patch under suspension of the rules Tuesday, a bill based largely on legislation by Senate Finance Chairman Max Baucus.

Baucus' bill failed to advance on the Senate floor largely because it attempts to reduce government payments to private Medicare Advantage insurance plans by requiring them to contract with healthcare providers.

House Minority Whip Blunt predicted Friday it would fail to get the required two-thirds vote in the House for the same reasons.

The scheduled 10.6 percent physician pay cut takes effect July 1 unless a patch is enacted.

On Wednesday, the House will take up a $61.5 billion bill shielding 21 million more families from the alternative minimum tax in 2008, teeing up the annual patch earlier this year to avoid a repeat of last year's end-of-year endgame.

Without fixing the AMT, a married couple with four children making $75,000 a year would be hit with a $2,100 higher tax bill, for example, according to Deloitte Tax. That is a burden neither party wants to pass on to the middle class, particularly with the economic downturn and elections looming.

This year, most Democrats have largely dropped the pretense that the bill will comply with pay/go rules, which could spur earlier movement.

In an effort to advance a separate package of renewable energy incentives and other individual and business tax breaks, Baucus has already proposed including an AMT patch without offsets, for example.

For now, however, House Democrats are determined to show they are not simply going to roll over on pay/go for the AMT patch, meaning the stare down could continue at least until the August break.

As drafted by House Ways and Means Chairman Charles Rangel, about half of the revenue-loss associated with the AMT bill would be made up by taxing investment managers' income from their funds' gains at regular income rates of as high as 35 percent.

Known as "carried interest," income received as a share of gains in an investment partnership, such as a hedge fund or private equity fund, is taxed at the 15 percent capital gains rate.

In response to concerns from private equity firms that they were being unfairly singled out, like last year Rangel would apply the carried interest provision across all forms of investment partnerships or trusts, including real estate and energy. Carried interest received that reflects a partner's reasonable return on his or her invested capital would be exempt from the higher tax. [corrected from print version]

In total, the provision raises about $31 billion over 10 years, with the brunt falling on hedge fund and private equity managers.

"We continue to believe the current tax treatment of carried interest is the correct tax treatment," said Robert Stewart, vice president of public affairs at the Private Equity Council.

The group argues that private equity partners act as business owners, not employees, and bear a significant portion of the risks from their firms' investments. Some lawmakers fear higher taxes on investment managers could deplete startup firms' access to venture capital.

But backers argue fund managers are largely playing with others' money, and should be taxed at regular income rates for performing a service like most taxpayers are.

"Not only are we doing the right thing in paying for the relief we provide today, but we are also doing the right thing by removing some of the inequities that exist in the code," Rangel said at his panel's markup last week.

The rest of the offsets would largely be made up of provisions that have thus far made little headway in the 110th Congress. The first would eliminate about $13.6 billion worth of tax breaks for the five major integrated oil and gas companies, freezing the domestic production deduction at 6 percent. Another would raise $6.9 billion by preventing foreign multinationals operating in tax haven countries from avoiding taxes on income earned in the United States. The offsets have provoked major industry opposition.

The third major offset is a $9.8 billion revenue-raiser, scaled down from Bush's budget, requiring banks to report the value of credit-card and other electronic payments to the IRS.

Democrats have moved back the effective date to 2011 to give businesses time to adapt, but the provision still has evoked an industry outcry, citing administrative costs. That provision is contained in the housing and foreclosure assistance bill on the Senate floor, increasing its likelihood of passage.

Also in the House, Pelosi plans to bring up several energy bills this week, either individually or as a package. The bills aim to tackle unused federal oil and gas leases, oil-market manipulation, gasoline price-gouging and boosting mass transit.

Democrats have offered a "use it or lose it" proposal to counter Republican arguments -- including those made last week by Bush and presumptive Republican presidential nominee Sen. John McCain of Arizona -- that Congress should open more federal waters to oil and natural gas drilling.

The Democrats' plan would levy escalating fees of up to $50 an acre on producers if they do not act on leases they have and would prohibit companies from having future leases unless they act in "due diligence" toward producing on current leases, as defined by the Interior secretary.

Republican leaders questioned the validity of the arguments, noting that millions of acres in existing leases do not contain oil or gas and that exploration can take years to complete before production can start.

Pelosi also might bring up a bill to combat oil market speculation.

Energy and Commerce Oversight and Investigations Subcommittee Chairman Bart Stupak, D-Mich., has offered a plan that gives the Commodity Futures Trading Commission regulatory power over all exempt energy markets that involve overseas exchanges. Stupak will hold a hearing on the issue today.

Energy and Commerce Chairman John Dingell and ranking member Joe Barton have a proposal setting up an interagency task force to study the problem.

Another proposal from Stupak is one the House approved last year establishing a federal definition for fuel price-gouging and authorizing fines and jail time for those who manipulate prices during supply emergencies. The White House has threatened to veto the bill, which received two-thirds support in the House.

Another bill, from House Transportation and Infrastructure Chairman James Oberstar, aims to boost mass transit in part by providing $850 million in grants for two years to reduce public transportation fares. A Rules Committee markup is scheduled for Wednesday for that bill.

Finally, the Senate will, after months of fits and starts, likely confirm five pending FEC nominees en bloc this week. Senate Minority Leader McConnell last week moved to confirm the nominees, but his attempt was blocked by Reid, who said a senator who wanted to review the latest nominee, Matthew Petersen, was traveling.

The Senate meets at 3 p.m. to resume consideration of housing legislation. No roll call votes will be held today.

The House meets today at 12:30 p.m. for morning hour and 2 p.m. for legislative business. Votes will be postponed until 6:30 p.m. The chamber meets Tuesday at 9 a.m. for morning hour and 10 a.m. for legislative business.


The House Appropriations Committee will continue panel markups this week.

The Legislative Branch Appropriations Subcommittee will meet today to mark up its bill.

On Tuesday, the full committee considers the Military Construction-Veterans Affairs and Homeland Security bills and will approve the panel's 302(b) allocations.

The full committee will meet Wednesday to consider the Energy and Water, Commerce-Justice-Science, and Financial Services bills

On Thursday, the full committee will take up the Labor-HHS and Agriculture bills.

In the Senate the Labor-HHS Appropriations Subcommittee will mark up its bill Tuesday followed by a full committee markup Thursday.


The House Armed Services Committee will hold a hearing Wednesday on recent security developments in China.

The hearing likely will focus heavily on China's unprecedented buildup of its naval, air and strategic military capabilities, a continuing source of concern for several members of the panel, including Armed Services ranking member Duncan Hunter.

James Shinn, the assistant secretary of Defense for Asian and Pacific security affairs, and Maj. Gen. Philip Breedlove, vice director for strategic plans and policy for the Joint Chiefs of Staff, are expected to testify.


The House Financial Services Committee will mark up several measures Tuesday, including legislation to treat ratings for municipal bonds the same way as those offered by corporations.

House Financial Services Chairman Barney Frank and other lawmakers complain that credit-ratings agencies have engaged in dual ratings system, where municipal bonds often receive lower ratings than corporate bonds with the same or higher risk of default.

They note there have been more than 14,000 issuances of general-obligation bonds by local governments since 1970, but no defaults. The issue has taken on more resonance as the bond insurance for sellers has skyrocketed following the collapse of the subprime lending market.

The full panel will hold a Thursday hearing on a measure that would require oil, gas, and mining companies listed on U.S. exchanges to disclose the payments they make to the governments of the countries from which those resources are extracted.

Frank argues his bill would allow corporate shareholders to make better decisions regarding the companies in which they invest.


The House Judiciary and Oversight and Government Reform committees are set to keep pressing the White House on its role in the disclosure of former CIA operative Valerie Plame's identity, as both press the Justice Department for records of FBI interviews of President Bush and Vice President Cheney.

At a hearing Friday at which former White House Press Secretary Scott McClellan testified, House Judiciary Chairman John Conyers said his panel "may have to resort to compulsory process" if DOJ refuses to turn over transcripts of interviews of Bush and Cheney conducted during Special Counsel Patrick Fitzgerald's leak probe.

House Oversight and Government Reform Chairman Henry Waxman issued a subpoena to the Justice Department for those and related documents last week.

Conyers and Waxman have said McClellan's new book and other disclosures suggest Cheney and other White House officials might have told subordinates to mislead the public about the leak.

The Oversight and Government Reform Committee is considering how to proceed after OMB asserted executive privilege over documents sought by the panel in investigations into White House intervention in EPA decisions.

On Friday, Waxman canceled a committee vote on holding EPA and OMB officials in contempt of Congress, saying the committee will proceed after weighing the privilege claim.

The Senate Homeland Security and Governmental Affairs Committee has scheduled a hearing Tuesday on speculation in commodities markets, as Congress weighs legislation to slow speculation in the oil-futures markets. The hearing will address three draft proposals introduced last week by Homeland Security and Governmental Affairs Chairman Joseph Lieberman.


The House Appropriations Committee will mark up the FY09 Homeland Security spending bill Tuesday, which would boost funding for state and local grant programs well above the amount requested by President Bush.

It would allocate the department $39.9 billion in discretionary spending, about $2.3 billion more than Bush requested.

About $2 billion more than requested for grant programs would go to state and local law enforcement and emergency response agencies.

The bill allocates $950 million for state homeland security grants, $800 million to support firefighters, $400 million for ports and $400 million for transit security grants.

Notably, the bill targeted $800 million for Immigration and Customs Enforcement to track down and deport criminal illegal immigrants in the United States.

Homeland Security Appropriations Subcommittee ranking member Harold Rogers, R-Ky., said the bill places too many restrictions on the department's ability to spend border security funds and build border fencing.

He said $650 million is being withheld from the department for such activities.

Homeland Security Appropriations Subcommittee Chairman David Price, D-N.C., said he does not believe the restrictions are too onerous, adding that they make good sense, such as requiring expenditure plans for funds.

He added that the department has not used about $335 million available for border security.

Republicans might oppose a provision requiring the department to pay prevailing wages on contracts.

The Senate Appropriations Committee marked up its version of the spending bill last week, allocating the department about $40.1 billion in discretionary spending.


Lawmakers are gearing up for hearings to examine Internet competition on the heels of an announcement that Google and Yahoo will join forces in online advertising.

The House Small Business Regulations Subcommittee will be the first to tackle the topic on Wednesday.

The House Judiciary Committee's competition and antitrust task force will take its crack on Friday.

Meanwhile, the Senate Judiciary Crime Subcommittee Thursday will hear perspectives on the challenges of catching fugitives in the 21st century. Senate Judiciary Crime Subcommittee Chairman Joseph Biden, D-Del., introduced a bill last week to authorize $25 million in grants for state and local agencies to make their warrant databases compatible with the national system.

The measure would authorize more resources for the U.S. Marshals Service to fund regional and local fugitive task forces and fugitive extradition programs.

The Senate panel's Constitution Subcommittee will hold a hearing Wednesday focusing on laptop searches and other alleged privacy violations faced by Americans who return from overseas.

The House Judiciary Crime Subcommittee has scheduled a Tuesday hearing on Internet-based pharmacies and their impact on drug abuse.

While legislation has not been introduced in the House, the Senate unanimously approved a bill in April by Sens. Dianne Feinstein, D-Calif., and Jeff Sessions, R-Ala., to require all controlled substances purchased on the Internet be made with a legitimate prescription and a medical examination.


Republican Rep. Chris Cannon faces a tough challenge from former state official and ex-BYU football player Jason Chaffetz in Tuesday's congressional primary in Utah, but two other incumbents, Democratic Rep. Jim Matheson and GOP Rep. Rob Bishop, get free passes in the primary.

The winner of the Cannon-Chaffetz contest will face Democrat Bennion Spencer in November. Bishop will face Democrat Morgan Bowen in the fall, while Matheson and construction company owner Bill Dew, a Republican, will square off.

Also on Tuesday, President Bush will cross the Potomac River for a Republican National Committee reception at a private residence in McLean, Va.

Wednesday is the filing deadline for congressional candidates in Rhode Island.


"Star Wars" creator George Lucas will liven up a Tuesday hearing before a House Energy and Commerce subcommittee on the arcane and complicated subject of revamping the multibillion dollar universal service program that subsidizes telecom connections in rural and low-income areas.

The hearing will be held before the Telecommunications and the Internet Subcommittee, chaired by Rep. Edward Markey, D-Mass.

Lucas has been interested in using telecommunications technology to promote educational opportunities since the early 1990s, Markey said during a Friday speech.

Meanwhile, the House is expected to consider today an "enhanced 911" bill under unanimous consent after the Senate cleared a counterpart measure last week.

The legislation would promote wider use of technology designed to ensure that emergency calls made over Internet-based phone networks deliver the dialer's location, name and phone number to dispatchers.

This article appears in the June 28, 2008 edition of NJ Daily.

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