Legislative Agenda: 2015, The Year of Reform?
As the 114th Congress gets settled in nice and comfortable this month, it will be time for the United States government to get down to the business of effecting change in the lives of 316 million Americans. Or, at least, that's what our dedicated servants pledge the day they are sworn in. Actual results may vary.
The balance of President Obama's term should be entertaining, if not effective, or perhaps a combination of both. The U.S. Senate and the House of Representatives are now under Republican control. Will the president adopt a more centrist approach, as Bill Clinton had done nearly 20 years ago, or will his final two years in office be marked by inactivity? (Insert the "Why change course now?" Republican joke here.)
OK, we're not here to pick sides, but we do want to advocate for the printing industry lobby. And given the interesting political climate that has taken shape—including a hostile Congress—there are a number of factors at play that could possibly set the stage for meaningful and positive legislation from the printing lobby point of view.
There are a handful of key reform issues—taxes, patents and postal—that could actually see action before the end of the Obama Administration. And, at the risk of completely jinxing the chances of meaningful legislation, we're going to go out on a limb here and predict action, in 2015, on the question of patent troll reform.
We are lucky to have the Printing Industries of America's (PIA)No. 1 lobbyist, Vice President of Government Affairs Lisbeth Lyons, to help us navigate the tricky waters of legislation and understand the players and their roles in making or breaking the prospects for positive change. Politics is an inexact science, but hopefully we'll help make better sense of the main talking points that impact the lives of those working in the printing industry.
Issue: Tax Rates, Deductions
Where it Stands: Rep. Dave Camp (R-MI), the chairman of the House Ways and Means Committee, retired at the end of the 113th Congress. He championed a wide-ranging, comprehensive tax overhaul, which included a reduction of rates and closing of loopholes—"things that everyone hated," Lyons says. A number of elements in the proposed overhaul included the elimination of mortgage deductions for homeowners and the lowering of charitable rates tax deductions.
Print Lobby Viewpoint: Any type of reform must be comprehensive, Lyons notes, meaning that both corporate tax rates and individual tax rates have to be addressed. "That individual rate is paid by many small businesses," she says. "To just address the corporate rate is fine for large, multinational corporations. But, for a majority of the printing companies that are small businesses, they need to see the individual rate side addressed, as well."
Possible Outcomes: While Camp's work never materialized, certain elements could be incorporated as jumping off points for incoming chairman Paul Ryan of Wisconsin. The former vice presidential candidate is viewed as a thought leader on budget and tax issues.
Ramifications of Inaction: Not all bad. The down side in Rep. Camp's blueprint for a revenue-neutral plan was that it called for raisers (a.k.a., tax hikes) in other areas of the tax code. One such idea was to remove the ad tax that allows corporations to deduct 100 percent of their advertising costs. Camp's plan did propose the elimination of this deduction. This threat has been around for the better part of a decade, but a coalition has been hard at work countering the idea on Capitol Hill.
"It's very harmful to our industry," Lyons points out. "Eliminating the full deductibility of advertising costs would prove to be a big hit on print manufacturers who rely heavily on the print advertising of their clients, a bread-and-butter piece of business."
Analysis: President Obama has respect for Ryan, which counts for something. And perhaps the president will be looking for another legacy item to add to his presidential trophy case to sit beside the Affordable Care Act. But once the fall arrives, thoughts will be turning to the 2016 presidential election. Comprehensive tax reform will require time to piece together, so 2017 may be more realistic.
Issue: Patent Litigation, Patent Troll Abuses
Where it Stands: The 113th Congress came oh-so-close to passing bipartisan legislation that would have crushed patent trolls and patent litigation abuses. The Senate Judiciary Committee was on target to pass a bill out of committee and bring it to the floor. But a coalition led by trial lawyers and pharmaceutical companies—strange bedfellows with differing road maps, but a common destination—managed to stop the bill in its tracks.
Print Lobby Viewpoint: As is the case in many industries, a comprehensive patent reform bill would be welcomed with open arms by the printing industry. The printing industry has been stung in recent years by a pair of entities that hold patents related to prepress, computer-to-plate workflows, Web-to-print and fulfillment (among other disciplines) and are demanding that certain printers pay a one-time licensing fee ranging from $75,000 to $90,000.
Possible Outcomes: There is a very real possibility that reform legislation could be enacted during the first quarter of 2015. How could that be, you ask? The answer is somewhat funny. Of all the things on the legislative agenda, patent reform sits atop the list of passable legislation. Congress may not be able to come to agreement on many issues, but this one appears to be a no-brainer. And just when you think that politics is a hopeless highway of partisan gridlock.
Ramifications of Inaction: The so-called patent trolls "have the room legally to send threatening letters, threaten small businesses and basically extort settlements from companies by accusing them of infringing on patents," Lyons says. "There needs to be a law to block that from happening. Right now the patent trolls have carte blanche to run amok."
Analysis: While the general idea is to go after shell companies that exist only to shake down vulnerable, small businesses, which can't afford high legal expenses to defend themselves, for what is largely viewed as extortion, the question becomes: What is a troll?
Lyons notes that if any entity that sells a patent is defined as such, then a university or a research institute could fall under that heading. Reform legislation doesn't necessarily mean these quote/unquote patent holders will go away. When law and politics are fused, there are absolutely zero certainties.
Issue: Postal Rate Hikes, USPS Restructuring
Where it Stands: The House passed a reform bill back in 2013, but the Senate had no such luck behind the efforts of Sen. Tom Carper (D-DE) and Sen. Tom Coburn (R-OK), whose S. 1486—the Postal Reform Act of 2013—could not get off the ground. In fact, the printing industry found some provisions so toxic that Lyons had to go to bat AGAINST the bill. Tammy Baldwin (D-WI) championed the mailing industry's postal cause, but her amendment to keep the bill afloat and keep the process moving was defeated.
Print Lobby Viewpoint: Partisanship is more about geography and less about party lines. But as the tug of war continues, the printing industry's needs remain unchanged. It needs price certainty and affordability with postal rates to enable marketers to better plan the mailing aspect of their marketing campaigns.
"It's important that the U.S. government be able to show that the USPS is not going to be turning off its lights anytime soon, that the financial woes of the Postal Service aren't going to cause service and standard delays," Lyons contends. "We need to have stability and affordability going forward. There are ways to do that—both financially and by restructuring some of the labor costs and infrastructure of the Postal Service."
Possible Outcomes: New faces abound. Rep. Jason Chaffetz (R-UT) takes the helm of the House Oversight and Government Reform Committee from term-limited Darrell Issa (R-CA). Chaffetz has been a vocal and engaged supporter of postal issues during his six years in Congress and has pledged to make reform one of the priorities of his committee going forward.
On the Senate side, Ron Johnson (R-WI) takes the helm of the Homeland Security and Government Affairs Committee from Carper. Johnson, despite coming from a state renowned for both paper and print manufacturing, does not stand in support of the graphic arts industry. Yet his liberal counterpart, Baldwin, is on board with the mailing industry. Go figure.
Ramifications of Inaction: The Carper-Coburn bill was so problematic—particularly in the area of its rate-setting structure—that no action, in this case, was better than reform legislation. But this ongoing drama has an expiration date. Something will happen by 2017, as the last reform legislation called for a review of the rate setting process after 10 years. If Congress doesn't act, the review will fall to the Postal Regulatory Commission (PRC).
Analysis: The mailing industry and the postal unions came together to support an alternative piece of legislation, and that could well represent a jumping off point in 2015. There are many new faces on board, including new Postmaster General Megan Brennan. Sen. Johnson will be a tough nut to crack, as he supported the Coburn bill, so the lobby has its work cut out for it. Chaffetz has already said, on the record, that he wants to get something done with postal reform.
Will postal reform actually happen in 2015? Lyons points out there are alternatives to Carper-Coburn that are "written and ready to go." Thus, don't let the multitude of new players on the landscape lead you to the conclusion that postal reform is restarting from square one. And no longer does Congress seem content on waiting until the U.S. Postal Service's situation reaches the critical level, when a crisis management solution is required.
As is the case with much-needed patent reform legislation, postal reform could be an opportunity for the Obama Administration to add another feather to its cap. PI