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Capitol Watch: The Bell is Ringing – Recess is Over

By Anna Denecke, Associate,
Blakey & Agnew, LLC

It seems like just yesterday we were waving Members of Congress au revoir as they set off for August recess. Suddenly it’s already September, and in just a few short days lawmakers will return to Washington. When they do, they’ll face a lengthy to-do list that includes, among many other big-ticket items, a must-pass long term surface transportation bill.

When lawmakers adjourned at the end of July, the Senate had just passed the DRIVE Act, a six-year reauthorization bill with $350 billion in contract authority. The House turned a cold shoulder on the legislation. The primary source of disagreement between the two chambers was the Senate Finance Committee’s decision to identify three years worth of funding for the six year bill, thereby putting off the question of how to maintain the solvency of the Highway Trust Fund once again.

Instead of embracing the Senate’s DRIVE Act, the House passed another short term extension to MAP-21. Then they left town, forcing the Senate to approve the short term patch, or risk taking blame for ceasing highway projects and unemployed construction workers.

The latest MAP-21 patch extends contract authority until October 29, but contains a large enough cash infusion to keep the Highway Trust Fund solvent until mid-December, if necessary. Because of this funding surplus, it would be relatively easy for the House to pass another MAP-21 extension until the end of the year, which would buy the chamber an extra two months to develop an answer to the DRIVE Act. Of course, the extended time-frame is contingent on the Senate agreement to sign onto another short term highway bill, which may be met with reluctance.

It’s not only the when of the surface transportation bill that’s still up in the air – it’s the how as well. Repatriation as a source of revenue for the Highway Trust Fund has a growing list of supporters in the House, but it remains a heavy lift.

On June 24, Ways and Means Subcommittee on Select Revenue Measures Chairman Dave Reichert (R-WA) held a hearing to the topic. Repatriation, or the process in which American companies bring foreign earnings back to the U.S., could serve as a viable source of funding for highway projects, witnesses at the hearing testified. However, there is

widespread disagreement on how to structure repatriation. Congressional and Administration proposals have offered varying tax rates and differed on whether repatriation would be voluntary or mandatory.

Further complicating this process, especially considering the tight timeframe the House has to produce an answer to the DRIVE Act, is the likelihood that repatriation would take place in the context of a broader corporate tax code overhaul. While Ways & Means Chairman Paul Ryan (R-WI) was bullish on prospects, telling reporters in February "tax reform is a 2015 thing, for sure, and it’s got to be done by summer," summer has come and gone. In fact, the last time Congress successfully overhauled the corporate tax system was 1986.

As if the notion of coupling the highway bill with tax reform isn’t a Herculean task in itself, Congress also has a number of big-ticket items to attend to when they return from recess. None of the twelve appropriations bills that fund the federal government were passed this spring, meaning Congress will likely be forced to approve an omnibus by September 30. Additionally, the Ryan-Murray Bipartisan Budget Act, which eased sequestration two years ago, is set to expire this fall and a replacement is needed. Finally, lawmakers will need to increase the debt limit some time after the end of October as well as address year-end tax extenders.

The challenges facing Congress as they work to develop a long-term surface transportation bill are significant - but not insurmountable. The highway bill has a long tradition of bipartisan support in both the House and the Senate. Given the many contentious issues lawmakers must deal with this fall, working on a highway bill might be appealing after all.

Blakey & Agnew, LLC is a public affairs and communications consulting firm based in Washington, DC.