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Politics, Law and Policy Blog

Bipartisan policy insights and political intelligence

Will the IRS Scandal Derail Tax Reform?

Posted in Tax Policy

By Joe Dowley

Joe Dowley served as Chief Counsel of the Committee on Ways & Means, U.S. House of Representatives when Congress last undertook fundamental tax reform.

There is a “trifecta” of alleged scandals, one of which involves the IRS, afflicting Washington right now. For veteran Washington scandal watchers it is likely still too early to know if the three situations, or any single one of them, will ultimately have legs sufficient to undermine the Administration’s second term agenda, or maybe become something much more.

Based on what is now known, however, seasoned observers are skeptical that any or all of these scandals would be the real reason for not doing tax reform in 2013. Clearly, there are lots of other reasons for not undertaking a re-write of the tax code – not the least of which is that true reform is seriously dangerous to the re-election prospects of many officeholders. Another observation is that most of the impetus for tax reform is coming from the two tax-writing committee chairmen, not the now-suffering – and accountable – Obama Administration.

The three scandals, in case you missed them:

  • the Benghazi affair involving the issue of the Administration’s protection of embassy personnel and its subsequent actions to characterize events;
  • the Justice Department’s decision to secretly subpoena the phone records of certain Associated Press reporters who were filing stories apparently based on intelligence leaks on the failure of a terrorist attack in Yemen;
  • and the news that the IRS has selectively picked certain conservative groups applying for tax-exempt status for slow-or-no-go approval treatment.

Weekly Health Policy Update: Funding announcements and exchange news

Posted in Health Policy

By Elizabeth Carpenter

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up is our weekly look at regulatory developments affecting health care at the federal and state level. Last week, the White House announced enrollment assistance funds, PCORI awarded research funds and CCIIO issued health insurance rates review grants.

Health Insurance Exchanges: State of the States update is our weekly State of the States report on Health Insurance Exchange developments. Last week, there was a surprise announcement from Utah on the outcome of its negotiations with HHS and an HHS funding announcement for community health centers.

Weekly Health Policy Update: CMS Releases Shorter Exchange Applications

Posted in Health Policy

By Elizabeth Carpenter

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up is our weekly look at regulatory developments affecting health care at the federal and state level. Last week, CMS released shorter Exchange applications and CCIIO provided additional details on the roles of agents and brokers.

Health Insurance Exchanges: State of the States update is our weekly State of the States report on Health Insurance Exchange developments. Last week, New Mexico and Hawaii held board meetings while CMS had its first round of stakeholder calls for Federally-facilitated and State Partnership Exchange states.

Fiscal Outlook Worsens for State and Local Governments

Posted in Health Policy

by Dennis G. Smith

The Government Accountability Office (GAO) has just released its annual update on the long-term fiscal outlook for state and local governments and the picture has gotten worse. GAO’s simulation model shows that the “fiscal gap,” which is “an estimate of the action needed today and maintained for each year to achieve fiscal balance over the next 50 years” has grown to the equivalent of a 14.2 percent reduction in current expenditures. In other words, to maintain a balanced budget, which nearly every state is required to do, spending will have be reduced 14.2 percent every year or there must be some combination of reductions and new revenues. By comparison, the fiscal gap in 2010 was 12.3 percent of expenditures.

The primary driver of this concerning situation, according to GAO, is the unchecked cost of health care. State and local governments’ budget priorities continue to be squeezed by the cost of Medicaid and the health care costs of employees and retirees. Workers will also feel the effects.  As health care costs require a greater percentage of GDP, wages and salaries will decline.

States, local governments, and their employees need solutions to the problems presented by the excess cost of health care. Failure to find such solutions will spread its effects throughout governmental and family budgets.

Lessons from Robert F. McDonnell’s Grand Adventure

Posted in Government Ethics

By David Fine

The unfolding tale of Virginia Governor Robert F. McDonnell is like a law school exam about almost everything that can be done wrong at the intersection of ethics, campaign finance and criminal law.

It is a lesson for politicians, companies doing business with government, and their advisors. Notably, the FBI’s investigation of McDonnell and his wife began with a federal investigation of securities violations of a company whose CEO was a prominent McDonnell donor, and with disclosures by a former chef at the Governor’s mansion who is seeking to have state embezzlement charges against him dismissed.

According to news reports:

  • Johnnie R. Williams, the CEO of a major McDonnell campaign donor, Star Scientific, paid $15,000 for the food at the wedding of McDonnell’s daughter, which was held at Virginia’s historic executive mansion; this gift was previously undisclosed, until the revelation from the former chef, who catered the event;
  • Three days before the wedding, McDonnell’s wife flew to Florida to speak at a gathering of doctors interested in learning more about a chemical used in Anatabloc, a dietary supplement produced by Star Scientific;  among other things, she told attendees that she supported Anatabloc and believed that the use of Anatabloc would lower health care costs in Virginia;
  • Shortly after the wedding the Governor allowed Star Scientific to use the Governor’s mansion to host an event promoting Anatabloc; the event was paid for by McDonnell’s PAC; the Governor attended the event to acknowledge grants Star Scientific had made to public universities.

Questions to be sorted out include:

  • Which, if any, of the undisclosed gifts violate Virginia’s (relatively lax) ethics laws? For example, McDonnell, as Governor, does not explicitly fit within the definition of a “government officer” or “government employee” subject to heightened gift restrictions under state law, and Virginia allows gifts of any amount to the families of elected officials.
  • Should the law be amended to prevent indirect gifts such as the payment of the catering bill?
  • Were any of the gifts provided in exchange for action taken on behalf of Star Scientific by the Governor or his wife?
  • Were the gifts appropriately disclosed?
  • Was the PACs payment for the Star Scientific event reported? Even if so, was it legal under Virginia’s campaign finance laws?
  • Was the Governor’s mansion event done as a quid pro quo for Star Scientific’s grants to public universities.
  • What, if any, other unreported gifts were made?
  • Was McDonnell’s wife paid for the Florida trip? By whom, in what capacity?
  • Should Virginia establish an independent ethics commission, as proposed by Terry McAuliffe, the Democratic Gubernatorial candidate?

It may be that none of conduct here violated any ethics codes or criminal law. But the political and reputational damage is done, both to the Governor and to Star Scientific.

Companies doing business with the government, and their counsel at any level, should pay heed to this story.

Assume that conduct like that described here will always come out, often in the same way it did so here. Never rely on the elected official to determine the propriety of any action. Know the applicable campaign finance, procurement, ethics, and criminal laws, and their interrelationship. If the conduct smells bad, don’t do it unless and until you fully understand the potential risks. Even then and if technically legal, don’t do it if you are unwilling to undergo a trial in the court of public opinion. Create a comprehensive ethics program, embed it in the organization through training, and enforce it rigorously.

If done right, you should never find yourself the subject of a story like this one and, if you do, will have a better chance of coming out of it successfully.

Modernizing Elections

Posted in Campaign Finance, Colorado

By David Fine

According to research sponsored by the Pew Center on the States, approximately 24 million (one out of every eight) voter registrations are no longer valid or significantly inaccurate, more than 1.8 million deceased persons are listed as active voters, and approximately 2.75 million persons are registered in two or more states.  At the same time, an estimated 51 million U.S. citizens—more than 24 percent of eligible voters, are unregistered.  According to the study, deficiencies in our voting systems waste taxpayer money, undermine confidence in the integrity of and fuel partisan debate over election integrity.  A key factor underlying these problems is the mobility of the American population, including those serving in the military.

A bill working its way through the Colorado legislature, which will likely be signed by the Governor, attempts to address these problems and will be a model for future such legislation in other states.  Among other things, the legislation would require mail ballots to be sent to every qualified voter, allow registration on election day, allow online registration up to eight days before an election, and allow early voting at least fifteen days before an election

While the legislation is opposed by Republican Secretary of State Scott Gessler and most Republican legislators, it has been endorsed by at least one leading Republican election lawyer and by former election officials from both major parties in Colorado.  In our view, Colorado is at the forefront of a trend toward similar modernization efforts, as states endeavor to trim costs, utilize technology and ensure that those who can and want to vote, are able to do so as easily as possible.

Weekly Health Policy Update: HHS Hill Testimony, New CMS Regulations & Exchange News

Posted in Health Policy

By Elizabeth Carpenter

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up is our weekly look at regulatory developments affecting health care at the federal and state level. Last week, Senator Baucus announced he will retire, Marilyn Tavenner’s confirmation was put on hold and CMS released Medicare Incentive Reward Program regulations.

Health Insurance Exchanges: State of the States update is our weekly State of the States report on Health Insurance Exchange developments.  Last week, leaders from HHS and CCIIO testified on the Hill, while New Mexico and Idaho took significant steps toward getting their exchanges operational.

Can Beyond the Border help the 21st Century be the “North American Century?”

Posted in Canada-U.S. Relations, Trade

By Andrew Shaw

Last week, the Congressional Northern Borders Caucus held its kick-off event for the 113th Congress on the Beyond the Border (BTB) and Regulatory Cooperation Council (RCC) bilateral initiatives between the U.S. and Canada.

The forum featured a diverse group of speakers, including Canadian Ambassador to the U.S. Gary Doer, Department of Homeland Security Assistant Secretary Alan Bersin, Representative Bill Owens (D-NY), and Representative Kevin Cramer (R-ND). In addition, the forum offered the perspectives of the private sector with comments from Canadian American Business Council Board Members Michael Fitzpatrick of GE and Kelly Johnston of Campbell Soup. The forum underscored the importance of BTB in enhancing security while also increasing trade and travel between the U.S. and Canada. The panelists also praised the potential of RCC to lead to greater regulatory alignment in a number of sectors, including food products, motor vehicles, and veterinary drugs.

In an increasingly competitive global economy, Assistant Secretary Bersin argued that the 21st century will be the “North American century.” While the U.S. and Canada cannot and should not compete on wages with China and other Asian countries, efforts like BTB can help to enhance both countries’ economic competitiveness by expediting lawful trade between both countries, according to Assistant Secretary Bersin. Continue Reading

Weekly Health Policy Update: HHS/CMS Congressional Testimony & Exchange News

Posted in Health Policy

By Elizabeth Carpenter

Each week, our Health Policy team recaps recent health care developments in two reports, Weekly Health Care Wrap-Up and Health Insurance Exchanges: State of the States.

Weekly Health Care Wrap-Up is our weekly look at regulatory developments affecting health care at the federal and state level. Last week, HHS Secretary Sebelius testified before Congress at numerous hearings and the Federal Basic Health Plan Timeline was released.

Health Insurance Exchanges: State of the States update is our weekly State of the States report on Health Insurance Exchange developments.  Last week, Connecticut announced its SHOP contract awardee and there was news about implementation for the Federally-facilitated Exchange.

Privacy and Cybersecurity Collide as House Continue to Debate Information Sharing Legislation

Posted in Congress, Cybersecurity, Data Privacy, Legislation (Federal)

By Dan Caprio

Yesterday, the White House  issued a Statement of Administration Policy that includes a threat to veto the Cyber Intelligence Sharing and Protection Act (“CISPA” or H.R. 624) unless further changes are made to the bill’s privacy protections to require removal of personal information before cybersecurity data is shared with the government.

A U.S. Chamber of Commerce coalition has stated in a letter to House Intelligence Committee Chairman Mike Rogers (R-MI) and Ranking Member Dutch Ruppersberger (D-MD) that an amendment to CISPA requiring businesses to remove personal information is unnecessary and costly especially to small and medium sized business thereby limiting their willingness to participate in information sharing.

The full House will continue to debate the bill today.