Legislative Issues for 2012

When it comes to the legislative agenda in a presidential election year, 'tis best to strike while the iron is hot. And that iron cools off considerably once school lets out.

When the weather heats up, silly season begins in Washington, D.C. All attention will turn to the November elections, and virtually nothing will get done in Congress. That's hardly a bold prognostication; historically, except for any must-pass legislation needed to keep the government running, Congress hangs its "out to lunch" shingle around mid-year to focus on elections.

The printing industry agenda, one might think, would presumably suffer from a reduced legislative term, due to a lack of high-priority issues on its to-do list. But, that is not the case in 2012. Three of the four issues of most interest to Printing Industries of America (PIA) and its lobby—health care, taxes and regulatory—are industry agnostic and impact most Americans. And, while postal reform could impact thousands of workers and the nation's mail system, it is mostly driven by the mailing community.

Lisbeth Lyons, vice president of Government Affairs at PIA, provides perspective on her lobbying efforts, as well as insight into which talking points Congressional members are weighing as they try to tackle some big-ticket items before election season.

Postal Service Reform

Mr. ZIP has taken matters into his own hands with a national PR agenda that has raised visibility to unprecedented levels. At no time in history has the plight of the U.S. Postal Service (USPS) garnered more national attention than it has over the past 12 months. The New York Times, Washington Post, Time magazine and countless other publications have documented the decline of this American institution, and its inability to operate profitably.

The USPS posted a $5.1 billion loss for its 2011 fiscal year, a figure that would have eclipsed $10 billion had Congress not postponed its crippling $5.5 billion payment to pre-fund retiree health benefits. Mail volume dropped by 3 billion pieces over the previous year and profitability from First-Class Mail dipped 5.8 percent.

The House and Senate have been kicking around legislative relief efforts, each taking vastly different roads to the same destination, while the tide of red ink continues to engulf the Postal Service. Postmaster General Patrick Donahoe and his staff determined it must reduce operating costs $20 billion by 2015 in order to become profitable again.

This past fall, the USPS began studying 3,700 facilities and 250 processing centers for possible closure and lowering service standards for First-Class Mail; the latter move would save an estimated $2.1 billion. Near the end of 2011, a number of U.S. Senators asked the Postal Service to delay any closings or consolidations. Mr. ZIP acquiesced, at least until May 15.

Donahoe has effectively put the ball back in Congress' court, armed with a moving-forward plan should Congress come up lame in its bid to author new postal reform.

"To be cynical, we've been at critical times in the past and Congress just kicks the can down the road," Lyons notes. "We may have reached the tipping point this time around. The legislative process is moving through the House and Senate. From a time line standpoint, this will be something Congress is considering during the first four months of 2012."

Each chamber has its own approach, but several key points are highly likely to be addressed by the reform package. Areas include the prefunding obligation, labor costs, workers' compensation reform, five-day delivery, and the ability to modernize and incorporate innovation in future product and service offerings—with as little Congressional oversight as possible.

"Even legislation may not preclude the Postal Service from right-sizing itself," Lyons notes. "There's more pain to come, more heartburn."

Jim Andersen, CEO of IWCO Direct of Chanhassen, Minn., and a key voice in the mailing community, is frustrated by the partisan politics. "It is regrettable that the level of Congressional gridlock we are seeing makes it unlikely that any substantive reform will happen before the 2012 election," he says.

"This means the real changes will come in 2013. Between then and now, Congress will likely pass the bare minimum to keep the Postal Service afloat. Actions that will probably be taken include extension of the RHBF (Retiree Health Benefit Fund) pre-payments, refunding the FERS (Federal Employee Retirement System) overpayment and/or raising the USPS debt limit."

Health Care Reform

According to Lyons, there is still a tremendous amount of interest in the Patient Protection and Affordable Care Act, a.k.a. Obamacare, among the printing community. What has sparked the interest recently was the announcement by the U.S. Supreme Court that it would listen to multiple challenges to its constitutionality, which could produce considerable fireworks with a decision in June on the individual mandate portion of the law that compels most citizens to buy health care coverage by 2014.

One caveat: the employer mandate requiring large employers to obtain minimum health coverage is not under review. What will be explored, in addition to the individual mandate, is the severability of the law; if the Act is inseverable, it must be struck down if any aspect of it fails. However, if the Supreme Court green lights the Patient Protection and Affordable Care Act, it will take a Congressional repeal of the employer mandate to lift the burden from industry.

"The printing industry is pushing for repeal of the employer mandate," Lyons adds. "Those mandates are the two pillars that hold the entire law together. If it's not constitutional, the entire law falls apart."

Repealing the employer mandate would pass the House, but has no chance in the Senate and President Obama would never sign it, according to Lyons. Thus, two options are more realistic—either the Supreme Court finds it inseverable or Obama fails to get re-elected, and the Republican leadership repeals it.

"Anything that happens in June gets baked into the psyche of the voters," she says. "There's no doubt that it will be reignited as much as a campaign issue as it was in 2010, back when people were throwing tomatoes at town hall meetings."

Tax Cuts

The Joint Select Committee on Deficit Reduction—the notorious "super committee"—was anything but as it gloriously failed to hammer out a bipartisan plan to reduce the federal budget deficit. They could not reform the tax code, and one of the stumbling blocks was the Bush-era tax cuts.

President Obama wanted to extend the cuts for all taxpayers except those individuals making $200,000 a year or married couples pulling down $250,000 annually. But the super committee threw up the white flag before the November 23 deadline.

Both chambers agreed to temporarily extend the payroll tax holiday—the reduced old age, survivors and disability (OASDI) taxes that fund Social Security—until the end of February, and were searching for common ground to pay for the estimated $263 billion cost.

Extending all the Bush-era tax cuts, which expire at the end of 2012, would tack roughly $3.9 trillion onto the budget deficit during the next 10 years. Tax reform will certainly be a hot-button topic heading into silly season.

"If (the tax cuts) expire, it will represent the largest increase on every single tax bracket," Lyons notes. "What will Congress do? Will they prevent it for certain income levels, or for everybody? Will we get into the millionaire surtax debate? It's fair to say neither Republicans nor Democrats will allow a tax increase on lower/middle income brackets.

"A lot of small businesses pay taxes on their corporations at the individual rate, so it's not just the Warren Buffets that are affected by the treatment of the upper tax rates."

Regulatory Initiatives

Three primary regulatory agencies—the National Labor Relations Board (NLRB), Occupational Safety and Health Administration (OSHA) and Environmental Protection Agency (EPA)—tend to take on an activist slant and help further the president's agenda when items can't get past the House of Representatives, Lyons notes. However, the administration can take it through the back door via the Big Three.

It is the era of gridlock in Washington. President Obama may have a piece of regulatory legislation he would like to see enacted, but it lacks support in the Republican-controlled House. Thus, one of the regulatory agencies can introduce new rules to achieve the same goal, causing Republicans to accuse the agencies of overreaching and usurping Congressional authority.

For example, Lyons points out that card check legislation, not even on the radar screen of the House, was revived by the NLRB through an "ambush elections" rule it issued. In short, the rule aimed at accelerating union organizing elections. In late November, the House voted 235-188 to pass the Workforce Democracy and Fairness Act (H.R. 3094) to counter what it views as a rule promoting employer/employee imbalance.

Of a more general nature, the House passed the REINS (Regulations from the Executive in Need of Scrutiny) Act to exercise more regulatory control over the agencies. The bill would apply to regulations with an expected economic impact of $100 million or more. With Democrats holding an advantage in the Senate, a vote here is not likely. But 23 Dem seats are up for re-election.

The down side of the bill is that up to 100 major regulations are passed each year, and piling these onto the Congressional workload may add oversight protections at the expense of meaningful regulations. However, supporters would point out that excessive regulation exacts a financial toll on business, consumers and the economy at a time when added costs are intolerable.

As always, your perspective depends on which side of the aisle you stand.