K Street Scouts Campaign Trail for Clues to 2017 Agenda

By Nancy Ognanovich

March 28 — The next president won’t take office for nearly 10 months yet. But K Street already is busy prepositioning for the likely agendas of either a Democratic or Republican administration.

Even with uncertainty over the eventual nominees, Washington lobbyists are gearing up for heavy activity next year on matters of tax and trade policy. Also expected is a new emphasis on addressing the budget deficit. And key elements of the Obama administration’s tenure—the Dodd-Frank Act and the Affordable Care Act—are seen as a continued focus for Congress, whatever the election outcome.

Members of King & Spalding’s public policy group noted during a recent discussion that the 2016 campaign season remains very volatile and election outcomes are unknown. Also, they said that campaign trail rhetoric isn’t always an accurate guide to the policies a candidate will advance once in the White House. But action on matters such as a tax code overhaul and trade deals seem a certainty, they said.

Democratic front-runner Hillary Clinton currently may not express support for the Trans-Pacific Partnership (TPP) deal, but she is expected to do so if elected to the White House, they said. Her agenda is also expected to include a tax overhaul that would provide new breaks for working families and incentives for manufacturers to stay in the U.S.

The leading Republican candidate, Donald Trump, is expected to oppose the TPP and could seek to revamp trade relations with China. Sen. Ted Cruz (R-Texas) and Ohio Gov. John Kasich (R) are split on the issue of TPP but like Trump are seen as likely to push for big tax changes. A Republican administration also is expected to promote TransCanada Corp.'s Keystone XL pipeline and more domestic energy production.  

Most members of King & Spalding's public policy team said that at this point, they expect Clinton to win next November's election, but former Maryland Gov. Bob Ehrlich (R), senior counsel for the group, said he won't try to predict the outcome.

“I have never seen [an] environment where two-thirds of the country thinks the likely Democratic nominee is a serial liar and Donald Trump who nobody knows what he thinks and regularly insults people,” Ehrlich said. “I have no idea who is going to win that race.”

Tax on Both Parties' Agendas

Ehrlich, also a former Republican member of the House, and other members of the firm said in a discussion about the next administration's agenda that they are preparing for either party to push hard to overhaul tax policy.

[R]egardless of who wins the presidency, there is going to be a driving force, one, to do something about the budget deficit and that's going to insist on new revenues, and there is going to be a tax bill if nothing else but to be able to move toward some kind of balanced budget, however you define it,” said former Rep. Michael Andrews (R-Texas), counsel at the firm.

Andrews, who served as a member of the House Ways and Means Committee, said one matter that will demand the attention of the next administration is the looming insolvency of Social Security.

“That means a tax bill to try to pay for some of it,” Andrews said.

Andrews also said the next administration will want to address the matter of corporate inversions and try to provide incentives for companies to keep manufacturing in the United States.

“Right now it's an easy target for everyone on both sides of the aisle and I think there's going to be a lot of force regardless of the president and regardless of the Congress to try to address that issue,” Andrews said.

K Street Scouts Campaign Trail for Clues to 2017 Agenda

Andrews said he agrees with others at the firm who believe Clinton would move more quickly on an international tax overhaul than would Trump.

“She wants to accomplish things,” said Andrews, who worked with Hillary Clinton during former President Bill Clinton's administration. “She wanted to get things done. She's willing to compromise and negotiate and talks to the other side and I think that will be especially true with tax reform.”

Divergence Seen on Trade

More divergence is seen on the topic of trade, however.

Bonnie Byers, an international trade economist at the firm, said Clinton has expressed opposition to the TPP deal while campaigning against Sen. Bernie Sanders (I-Vt.), who opposes trade deals. But Clinton is expected to take a more moderate approach if she is elected president, Byers said.

“Even though she opposes it now, I think she's left open the door to make some tweaks around the edges and get it through, so I suspect that's what she'll do,” Byers said.

Byers also said she doesn't think Clinton will try to pull the plug on the proposed U.S.-EU Transatlantic Trade and Investment Partnership, now in negotiations. She said that talks on that deal haven't been a target of unions and environmentalists and are only in their early stages.

“I think she will try to take a large part in getting that through and making sure the deal is a good one,” Byers said.

In contrast, Byers said “it's anybody's guess” how far Trump will push the anti-trade rhetoric heard on the campaign trail. Among other things, she said the Republican front-runner recently backtracked from previous calls for a 45 percent across-the-board tariff on imports from China.

Byers said Trump, an opponent of TPP, has suggested he may want to renegotiate the deal. Cruz also opposes it but Kasich has spoken in favor of the deal, she said.

Lloyd Hand, who was a top aide to President Lyndon B. Johnson and is senior counsel to the firm, said it is difficult to predict Trump's agenda because he hasn't given details on his policies.

“It's all bombast, he's going to build a wall, he's going to keep out Muslims,” Hand said. “All these things he's going to do are conclusory. There isn't a policy description behind it.”

Ultimately, however, Byers predicted Trump would tone down his trade talk.

“I suspect he'll be a lot more moderate than he's been on the stump,” Byers said.

Obama Policies in Cross Hairs

More certainty was expressed about how the candidates will approach the Affordable Care Act and the Dodd-Frank Act.

Allison Kassir, a government relations adviser at the firm, said Clinton is “fully embracing” the ACA, though she has expressed some concerns about cost increases and the rising cost of deductibles. She said Clinton hasn't backed Sanders's calls for Medicare to negotiate drug prices but said the issue is one recognized by both campaigns.

Similarly, partner J. Caleb Boggs said he sees “more of the same” in the area of financial regulation if Clinton is elected. He said that already many former appointees from her husband's administration are involved in implementing the Dodd-Frank law.

Boggs said that wouldn't be the case if Trump, Cruz, or Kasich were elected.

“The only thing standing in the way of wholesale repeal or a substantial rewrite of Dodd-Frank is a Democratic president,” Boggs said.

Boggs said there is substantial support for the bills to alter Dodd-Frank that were introduced by the House and Senate Republican chairmen of the committees with jurisdiction over banking.

“I think any of the Republican candidates would sign those bills,” Watts said.

‘More of the Same' Foreign Policy?

Clinton, who was secretary of state in the Obama administration, also is viewed as unlikely to stray too far from current foreign policy. Among other things, she wouldn't try to alter the recently negotiated nuclear deal with Iran, Hand said.

“She's already on record, she's going to support some form of immigration reform but I don't think there's going to be a lot of daylight between what you've seen under Obama and what you get from her,” Hand said. “After all, she's been the architect of his foreign policy.”

George Crawford, former chief of staff to House Minority Leader Nancy Pelosi (D-Calif.) and an adviser to the firm, said he also doesn't expect Clinton's defense policies to differ much from Obama's. He said he expects she will be tough on terrorists and follow the drone strike program that Obama pursued during his tenure.

“I think in some ways this might be the line of attack the Republicans take against her in the upcoming election,” Crawford said. “ ‘If you liked the last eight years, then vote for her.' I see the same thing on defense.”

In contrast, Hand said Trump has sharply criticized the Iran deal and could begin backing away from it on his first day in the White House. But Congress, he said, “would rise up and denounce him.”

He said he expects the deal to remain in place. “Everybody hopes that it will be successful, and the early signs are that it is,” he said.

To contact the reporter on this story: Nancy Ognanovich in Washington at nognanov@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com