What we can expect from Congress in 2007

(Article originally published by WFC Resources, December 2006, as an UpDate Column)

From the Wall Street Journal to the Washington Post, from blogs to BusinessWeek, no one hesitates to stick their neck out and predict what will come of the Democrats' victory in Congress. We, on the other hand, do hesitate. So instead, we took a close look at about 15 different journals, news magazines and other print media and are reporting here what the general consensus is about legislation that may impact the work-life arena if it becomes reality.

A boost in the federal minimum wage

While all observers assure us that there's no way the Dems can keep all those electioneering promises, no one doubts the chances for a new minimum wage. Nancy Pelosi promises a raise of $2.10 an hour, from the current $5.15 to $7.25, will happen within the first 100 hours (some quotes say the first 24) and a national poll by the National Council for Research on Women (NCRW) found Americans overwhelmingly believe it's time; both men (63%) and women (72%) were more likely to vote for a candidate who supported the raise. (While Missouri and five other states recently voted to boost their wages above the federal minimum, the Kansas law — untouched since 1988 — sets the lowest minimum of the 43 states that bothered to pass such laws. In Kansas, the hourly wage, $2.65, can’t buy a gallon of milk.

Executive pay and income inequality

Rep. Barney Frank (D-MA) says he'll make income inequality his focus this year (one Frank quote: "An average CEO makes more before lunch on his first day of work than a minimum-wage earner will make all year.") Fed Chair Ben Bernanke and Treasury Secretary Henry Paulson have joined other prominent Republicans in warning about the risks of the growing inequality, so some measures are likely to pass. But there may be gridlock here, since conservatives will only favor those measures that help low- and middle-income workers and leave the rich to get richer, and Democrats' most likely target of the war on inequality will be the wealthy, says The Wall Street Journal (11-21-06). They'll want cuts rolled back and taxes raised on dividends and capital gains.

WSJ predicts that Frank will reintroduce legislation calling for greater disclosure by companies about their "golden parachute" retirement packages, similar to a bill last year that had 33 co-sponsors. It's too early, say insiders, to speculate on this measure's fate.

Several believe strengthening unions will help, and one idea that has strong support among Democrats is a change to the current rule that calls for a secret ballot to approve a union. Democrats and labor leaders want employers to recognize a union after most workers sign a card asking for representation. Enlarging the earned-income tax credit is another likely option; it may get support from both sides since it would reward low-wage and middle-income workers without raising employers' costs.

The Washington Post reports that Democrats will make "fixing" the alternative minimum tax a top priority this year, and a White House spokesman says that's also a priority for the Bush Administration. The alternative minimum tax is about 40 years old, an extra tax some have to pay on top of the regular income tax. The original idea was to prevent people with very high incomes from using special tax benefits to pay little or no tax, but for various reasons the AMT reaches more people each year, including some people who don't have very high incomes. Getting rid of the tax altogether would cost more than $1 trillion over the next decade, and experts doubt that Democrats can find a way to do it.

Both parties are inching toward similar proposals on retirement savings, says the WSJ. One proposal would be a universal 401(k) to which employees, employers and in some cases, government, would contribute. It would narrow future inequality by encouraging Americans to save more in their working years.

Paid sick leave

Voters passed a law in San Francisco this November giving employees one hour of sick leave for every 30 hours worked in a week after three months of probation. The National Partnership for Women & Families and several activist groups in San Francisco will work hard to get Congress to do the same. Proponents claim the measure will be good for business, but San Francisco's Chamber of Commerce led the unsuccessful fight against it, and business groups nationwide will join the battle if Congress begins to consider it. We give it a slim-to-none chance this year, even though 61% of women (including 48% of Republican women) and 46% of men told the NCRW they would be more likely to support a candidate for Congress who supported paid sick leave for all workers.

Extend FMLA

An HJ Cummins column in the Minneapolis Star Tribune (11-10-06) suggests several items that might have a chance. One of them is extending the Family and Medical Leave Act to workplaces of 25 or more instead of the current 50. Another is the possibility of providing funding for demonstration projects like Minnesota's "At-Home Infant Child Care Program," which helps families with children under one to cover some of the costs of a parent staying home to care for the infant. Similar pilots are underway in Montana and New Mexico.

Health care coverage

This is the big one, and everyone seems to agree that new energy will be directed toward providing health coverage for all Americans. But some health care experts predict the winning strategy will be to promote grass roots efforts to pass state legislation. To pay for extending coverage to the 47 million uninsured, Democrats may want to revise the income tax exclusion for employer-provided health coverage. It looks like they have a chance at using the fed's buying power to negotiate lower prices with drug manufacturers, but Marilyn Moon, director of the health program at the American Institutes for Research and a former trustee of the Social Security and Medicare trust funds says, "This is going to be much more of a morass than people think." Negotiating drug prices, she says, is "a feel-good kind of answer, but it's not one that is easy to imagine how you put into practice."

They'll also try to drive down prices by widening the availability of imported drugs (Rep. Henry Waxman (D-CA) who will head the House Government Reform Committee, says reducing the price of prescription drugs is high on his priority list).

Another suggestion: Letting businesses with up to 100 employees have tax credits to buy insurance through a government-sponsored pool that will give them a choice of private health insurance plans.

With Democrats in charge, several experts predict that efforts to improve and expand health savings accounts will grind to a halt, since many Democrats see HSAs as a tax break for the wealthy. They may also move to expand the Children's Health Insurance Program. Others suggest another area where gridlock, in the form of each party's opposition to the other's health proposals, will intensify. It may be tough to pass any significant new health reform initiatives.

Offshoring

Rep. Charles Rangel (D-NY) will become chair of the House Ways and Means Committee. One of his top priorities will be "ending tax shelters for companies that move American jobs overseas," said the WSJ two days after the election.

Housing

Barney Frank is expected to push hard for legislation that will require Fannie Mae and Freddie Mac to use more of their resources for financing loans to low-income people.

Education

The Bush Administration wants to continue to focus on improving public schools through "No Child," and a coalition is pushing for more government support of Pre-K education. Our hope is that this will be one area that attracts bipartisan support. They could look to surveys by the Committee for Economic Development for evidence that business leaders overwhelmingly support universal Pre-K, saying it would improve the workforce and help U.S. economy in the long run.

Democrats would like to do more to help Americans pay for college. Nancy Pelosi's platform calls for making up to $12,000 a year in college tuition tax-deductible. She also wants to cut interest rates on student loans and increase the maximum Pell Grant for low-income students to $5,100 from the current $4,050.

Sarbanes-Oxley

Dow Jones reported on Nov. 21st that lawmakers want to give small and midsize firms some relief from the strict accounting rules while making large employers continue to toe the line.

Earlier this year, Reps. Gregory Meeks, D-N.Y., and Tom Feeney, R-Fla., introduced a bill that would free smaller firms from having to comply with the internal-controls requirements set by Congress in 2002. Meeks now says he wants to broaden the option to include midsize firms, although he said he hasn't decided yet where the new cut-off point would be set.

Immigration

The wall is out. The Congress that voted for it in September neglected to fund it, and the new chairman of the Homeland Security Committee, Rep. Bennie Thompson (D-MS) voted against it the first time and is considered an immigration dove. Top Republicans, including the President, are pro-immigration and support a guest worker program, but the Boston Globe says even though party leaders insist that rewriting immigration law remains a priority, they acknowledge that building consensus on how to do it will be tricky. Some, like Claire McCaskill, a new Senator from Missouri, are considered hawks, and have been very vocal. In a September television spot, says the Globe, McCaskill sat at a kitchen table and looked directly into the camera."Let me tell you what I believe in," she said. "No amnesty for illegal immigrants."

Business wants to keep the laws as simple as possible, says the HJ Cummins column, and they're worried about proposals to make employers responsible for determining the legal status of all their workers. Cummins quotes one labor law expert, who says, "They don't like to be in the business of being a cop. And they're trying to educate selectors not to focus on race and ethnicity when hiring." If the party can come to terms with its conservative element, in this area, at least, business and Congress might find some common ground.

Whatever happens with the 110th U.S. Congress, it won't begin to look like business as usual for at least a month or so, and it may make the morning paper just a touch more interesting.

Susan Seitel
President
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