Reuters/Jonathan Ernst
The US Capitol Building.
It seems that the impacts should come not only from what gets done, but more importantly, what doesn't.
1. An important piece to passing the TPP should fall into place
The Trade Promotion Authority, or the "fast track", passed the Senate on May 22 and Phillips expects it to pass a vote in the House in the next three weeks. The TPA authorizes the Administration to negotiate a trade deal - in this case the Trans-Pacific Partnership - and sets the framework that the Administration can use to negotiate. If an agreement on the TPP is then reached, Congress can implement or reject it but not make amendments.
"In our view, it is more likely that the House will pass TPA than defeat it, though the outcome is harder than usual to predict because support and opposition do not fall cleanly along party lines," Phillips wrote.
He notes that Republicans will make up the bulk of those voting for the TPA, but a few dozen Democrats will be needed to get it through. The TPA should speed up Congress on considering the TPP once negotiations are done, but Phillips says that most likely won't come until late this year.
2. A decision on Federal Affordable Care Act subsidies will come from the Supreme Court
Phillips expects the Court to determine whether or not federal subsidies for plans purchased through insurance exchanges are legal. The plaintiffs in the case argues that they law states plans bought through exchanges established by states are eligible for the discounts, not in the 34 exchanges run by the Feds.
5 justices seemed inclined during arguments to uphold the Federal subsidies, but Phillips writes that the decision could go either way. If the Federal subsidies are dismantled this would leave Congress with the need to fill that gap, but doing so would be difficult and proposals by Republicans have so far met with opposition.
According to Phillips the decision should come between June 22 and 29.
3. Fighting over banking reforms
The Senate Banking Committee recently passed a bill that would impact both private banks and the Federal Reserve. Changes such as loosening mortgage lending standards, raising the threshold for a bank to be designated as "systemically important," and requiring a presidential nomination for the head of the New York Fed are all in the bill.
Phillips writes that despite making it out on the floor, it faces major opposition: "However, the bill faces an uphill battle in getting through the Senate. Democrats on the Banking Committee unanimously opposed the legislation, and it is unlikely to have sufficient support to pass in its current form. There is a possibility that Senate Banking Committee Chairman Shelby will be able to negotiate a slimmer package of reforms that might win some Democratic support, but most of the important provisions noted above would be unlikely to make the cut, in our view."
4. Long-term infrastructure spending is not coming
The current infrastructure spending authority runs out on July 31 and Phillips doesn't expect a major solution to pass before then.
"Congress has failed to pass a long-term transportation infrastructure spending program for several years, and another temporary patch ahead of the July 31 expiration of spending authority looks likely," Phillips writes.
He expects the patch to only go through the end of 2015.
5. And that means no tax reform
Phillips writes that some members of Congress were expecting to use new taxes on corporations overseas earning to fund a long-term infrastructure investment plan, similar to President Obama proposal in February. Without the long-term plan, however, Phillips sees the window for any tax reforms as closed for now.
6. But it could mean reauthorizing the Export-Import Bank
Since the short-term infrastructure patch is necessary, Phillips expects that supporters of the Export-Import bank will saddle its reauthorization onto the bill.
"Ex-Im supporters are likely to seek to combine renewal of the bank's charter with some other must-pass legislation; the most obvious is the highway bill. If this occurs, it would increase the probability that the Ex-Im charter will be extended, at least temporarily. That said, since the highway program's authority does not expire until July 31, such a strategy would also raise the probability that authority for the Ex-Im Bank to make new export credit loans and guarantees would expire at least temporarily."