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Five Front-Burner Issues Now That the Republicans Control Congress

Five Front-Burner Issues Now That the Republicans Control Congress

The GOP now has control of both houses of Congress. That could be good for corporate America, where congressional reforms around taxation, health care, intellectual property, national security and immigration are high priorities. The 2014 midterm elections can charitably be deemed an emphatic repudiation of many Obama administration policies. The Republican juggernaut in key electoral races gave the GOP control of both houses of Congress and many state houses. For corporate America, the results are more nuanced.
Here are five areas where the ascendancy of the congressional Republicans will have an impact:

  1. Tax reform could help American companies bring cash back to the U.S. Much of the political sturm and drang over corporate tax maneuvers such as “inversions” and the “Double Irish” are actually the result of structural quirks in the U.S. tax code that punish U.S. companies if they repatriate overseas income. The status quo affects multinational American companies, especially due to the way overseas profits may be legally “deferred.” This has had the predictable result that many American companies now simply sit on piles of cash rather than bring it home and absorb the tax cost. Even though many economists consider the U.S. tax code as dysfunctional and anti-competitive, reform has been stymied by demagogic rhetoric over “fairness” and “corporate tax breaks.” Now there is a chance for a breakthrough — provided Mr. Obama shows some flexibility — and the Republicans, who have declared tax reform their top priority, don’t overplay their hand.
  2. The ACA may once again be challenged and partially repealed. President Obama’s signature legislative accomplishment will confront fresh challenges from a strengthened and emboldened Republican congressional majority. The law has been at the center of a massive political brawl since its enactment. But as Americans experience firsthand some of the side effects of the costly and unpopular legislation, there will be new pressures for reform or outright repeal of some of its worst provisions. Most Republicans have made clear their disdain for the law, which, until now, has been shielded by the Democrats’ control of the Senate. That will now change as health insurers and various interest groups let loose their full lobbying might.
  3. Patent reform can finally happen. The Obama administration, the House of Representatives and a bipartisan group of Senators all supported a patent reform bill called the “Innovation Act” — only to have it repressed by the machinations of Senator Harry Reid. The outgoing Senate Majority leader regularly suppresses legislation he doesn’t like so that it never sees the light of day – and he has done so with impunity – until now. So the Honorable Senator Reid smothered the bill to protect the patent trolls and trial lawyers that are a mainstay constituency of the Democratic Party. That’s not going to happen again, as many legislative observers now expect the Republicans to pass the bill sooner rather than later.
  4. It may finally get easier for American companies to hire overseas engineers. Immigration reform has been a third rail throughout Obama’s presidency, and a major frustration for American business in need of engineering and technical skills. Despite high-profile lobbying campaigns, including the $50 million debacle known as FWD.us, American companies have had only limited success in streamlining the process for hiring technical employees from overseas. The Republican-controlled congress may make such reforms easier. The pro-business wing of the Republican Party — which supports immigration reform as a way to obtain less expensive labor — might be able to muzzle demagogues in the House in order reach a deal with President Obama on “path-to-citizenship” and other middle-ground measures.
  5. There will be new congressional initiatives to reduce scrutiny by FinCEN and the NSA. The revelations of Edward Snowden, together with the enactment of the Foreign Account Tax Compliance Act (FATCA), has alarmed not only civil libertarians, but also American businesses and individuals with any form of legitimate overseas financial interest. When you add to this the effect that FATCA has had on the international banking sector, you have a perfect storm where practically everyone now struggles to comply with the costly and onerous exchange-of-information and reporting standards mandated by the Act. Stay tuned and expect the Republican congress to again focus on the issue of governmental scrutiny of Americans together with the related issues of national security and control of the southern border.

We live in interesting times.

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