www.forbes.com/business/2...tlook.html
The Year Ahead
Washington Watch List
Brian Wingfield, 12.26.07, 6:00 AM ET
Washington, D.C. - If members of Congress thought 2007 was tough--lawmakers' job approval rating is now a dismal 25%--just wait until 2008. Election years are notoriously difficult for crafting legislation, and President George Bush now remembers where he left his veto pen during his first six years in office.
If House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., could wish for anything in the New Year, it would probably be more Democrats in the Senate, where their initiatives have often stalled, or a change of heart by the president on most major issues. Since neither of those fantasies will happen, theyre stuck with what theyve got--some minor accomplishments for 2007 and much time to shape the legislative agenda for 2009, when a Democrat could be in the White House. Their overarching goal, of course, will be to retain power.
With President Bush on the way out, Republicans have no real champion for their agenda and will continue their defensive stance to block Democratic initiatives. With great success, they've sidetracked immigration reform, forced Democrats to abandon their "pay-go" budget rules to contain the expanding alternative minimum tax and saved Big Oil from big energy taxes. But they can only play defense for so long; you can't score if you don't have the ball.
Its still possible for the so-called New Direction Congress to get its groove back in 2008. Pelosi has pledged to focus on several items in the New Year: the economy, national security, health care and energy. For both parties, stimulating the economy (or keeping it from sinking) will be the No. 1 issue, and we expect both sides to adhere to fiscal discipline, as they did on most issues in 2007. From a business standpoint, at least, here's how we see things shaping up:
--Mortgage reform: Given the sense of urgency over the issue, there could very well be a major mortgage lending law next year. Last week, the president signed a bill to prevent foreclosure or refinancing from raising borrowers' tax burdens. A flurry of legislation to change the industry is in the works, including a bill that would penalize predatory lenders and another that would allow judges to lower mortgage payments for bankrupt borrowers.
--Farm Bill: It's due for a five-year renewal, and each chamber has passed its own legislation. In early 2008, they'll reconcile the differences. A few speed bumps: The White House and the World Trade Organization are applying pressure for subsidy limits. But there will be a farm bill in early 2008, as disputes generally fall along geographic, not party, lines.
--Product Safety: Congress upped the 2008 budget for the Consumer Product Safety Commission by more than 25%. The House has passed legislation to overhaul the agency, but tougher legislation is pending in the Senate. They'll find common ground: The House vote was 407-0.
--Health Care: In 2007 Bush vetoed expansion of the Children's Health Insurance Program, to the shock of many Republicans who supported the measure. Insiders on the Hill say they'll have another go at it in 2008. There's been talk on both sides of the aisle to send it back to the president.
--Energy: Nothing major will happen on energy in 2008 because Bush just signed an energy bill. Democrats will try to renew incentives for renewable energy, which expire at the end of 2008. On climate change, however, there could be some progress. Sens. Joseph Lieberman, I-Conn., and John Warner, R-Va., have proposed a "cap-and-trade" program that could be the blueprint to reduce greenhouse gas emissions, which would be taken up no sooner than 2009.
--Tax Reform: House Ways and Means Chairman Charles Rangel, D-N.Y., has proposed a tax overhaul greeted by Republicans as the mother of all tax increases. Rangel wants to do away with the alternative minimum tax, lower the top corporate marginal tax rate and allow the Bush tax cuts to expire. He also knows this plan isnt going anywhere in 2008, giving him a full year to fine tune the details with his colleagues.
--Research and Development Tax Credit: Congress let the current credit expire at the end of 2007, angering many business groups who say their tax bill could rise. Lawmakers will tend to this issue early in 2008, before this flashpoint becomes a conflagration.
--Trade: A dead issue for 2008. Congress has before it three administration-negotiated free-trade agreements, with Panama, Colombia and South Korea. But Democrats have found fault with all of them. It's highly unlikely they'll want to give Bush a victory on trade in 2008.

The Year Ahead
Washington Watch List
Brian Wingfield, 12.26.07, 6:00 AM ET
Washington, D.C. - If members of Congress thought 2007 was tough--lawmakers' job approval rating is now a dismal 25%--just wait until 2008. Election years are notoriously difficult for crafting legislation, and President George Bush now remembers where he left his veto pen during his first six years in office.
If House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., could wish for anything in the New Year, it would probably be more Democrats in the Senate, where their initiatives have often stalled, or a change of heart by the president on most major issues. Since neither of those fantasies will happen, theyre stuck with what theyve got--some minor accomplishments for 2007 and much time to shape the legislative agenda for 2009, when a Democrat could be in the White House. Their overarching goal, of course, will be to retain power.
With President Bush on the way out, Republicans have no real champion for their agenda and will continue their defensive stance to block Democratic initiatives. With great success, they've sidetracked immigration reform, forced Democrats to abandon their "pay-go" budget rules to contain the expanding alternative minimum tax and saved Big Oil from big energy taxes. But they can only play defense for so long; you can't score if you don't have the ball.
Its still possible for the so-called New Direction Congress to get its groove back in 2008. Pelosi has pledged to focus on several items in the New Year: the economy, national security, health care and energy. For both parties, stimulating the economy (or keeping it from sinking) will be the No. 1 issue, and we expect both sides to adhere to fiscal discipline, as they did on most issues in 2007. From a business standpoint, at least, here's how we see things shaping up:
--Mortgage reform: Given the sense of urgency over the issue, there could very well be a major mortgage lending law next year. Last week, the president signed a bill to prevent foreclosure or refinancing from raising borrowers' tax burdens. A flurry of legislation to change the industry is in the works, including a bill that would penalize predatory lenders and another that would allow judges to lower mortgage payments for bankrupt borrowers.
--Farm Bill: It's due for a five-year renewal, and each chamber has passed its own legislation. In early 2008, they'll reconcile the differences. A few speed bumps: The White House and the World Trade Organization are applying pressure for subsidy limits. But there will be a farm bill in early 2008, as disputes generally fall along geographic, not party, lines.
--Product Safety: Congress upped the 2008 budget for the Consumer Product Safety Commission by more than 25%. The House has passed legislation to overhaul the agency, but tougher legislation is pending in the Senate. They'll find common ground: The House vote was 407-0.
--Health Care: In 2007 Bush vetoed expansion of the Children's Health Insurance Program, to the shock of many Republicans who supported the measure. Insiders on the Hill say they'll have another go at it in 2008. There's been talk on both sides of the aisle to send it back to the president.
--Energy: Nothing major will happen on energy in 2008 because Bush just signed an energy bill. Democrats will try to renew incentives for renewable energy, which expire at the end of 2008. On climate change, however, there could be some progress. Sens. Joseph Lieberman, I-Conn., and John Warner, R-Va., have proposed a "cap-and-trade" program that could be the blueprint to reduce greenhouse gas emissions, which would be taken up no sooner than 2009.
--Tax Reform: House Ways and Means Chairman Charles Rangel, D-N.Y., has proposed a tax overhaul greeted by Republicans as the mother of all tax increases. Rangel wants to do away with the alternative minimum tax, lower the top corporate marginal tax rate and allow the Bush tax cuts to expire. He also knows this plan isnt going anywhere in 2008, giving him a full year to fine tune the details with his colleagues.
--Research and Development Tax Credit: Congress let the current credit expire at the end of 2007, angering many business groups who say their tax bill could rise. Lawmakers will tend to this issue early in 2008, before this flashpoint becomes a conflagration.
--Trade: A dead issue for 2008. Congress has before it three administration-negotiated free-trade agreements, with Panama, Colombia and South Korea. But Democrats have found fault with all of them. It's highly unlikely they'll want to give Bush a victory on trade in 2008.


