100+ Business Leaders Going to D.C. This Week for Chamber Fly-in

A record group of more than 100 of the state’s top business leaders and government affairs executives will be attending the Indiana Chamber’s annual D.C. Fly-in on September 27 and 28. The timing couldn’t be more perfect with a potential health care reform vote, rollout of a tax reform plan and the end of the fiscal year all taking place.

This year, legislative briefings will be conducted by congressional members, who will be highlighting key public policy areas that line up with their committee assignments and expertise:

  • Tax reform – Indiana 2nd District U.S. Rep. Jackie Walorski
  • Regulatory reform – Indiana 9th District U.S. Rep. Trey Hollingsworth
  • Health care reform – Indiana 8th District U.S. Rep. Larry Bucshon
  • Infrastructure and transportation policy – Indiana 4th District U.S. Rep. Todd Rokita
  • Education policy – Indiana 6th District U.S. Rep. Luke Messer

There is still time to register for the D.C. Fly-in; go to www.indianachamber.com/specialevents.

Make sure to follow us on Twitter at @IndianaChamber or #ICCinDC for up-to-the-minute important information on what’s happening in Washington.

Zimmer Biomet is the Fly-in’s dinner sponsor. Allegion is the cocktail reception sponsor. Build Indiana Council is the legislative briefing sponsor.

Event sponsors are AT&T, The Boeing Company, Duke Energy, The Kroger Co., Old National Bank and Wabash Valley Power.

New Senate Health Care Bill An Improvement for Employers

The U.S. Senate appears to be gearing up for another health care vote, with a measure from Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) headed to the floor as soon as the middle of next week.

At its core, the Graham-Cassidy proposal creates a block grant program, taking much of the funding provided in the Affordable Care Act (ACA) and sending it to the states for them to set up their own health care systems and determine where to direct the funds.

It also does away with several pillars of the ACA, including the mandate for individuals to have insurance or pay a penalty. The true ramifications of that are uncertain, but could mean higher premiums for those in the health care exchanges (aka those who don’t have insurance through their workplace).

From the standpoint of employers, the Indiana Chamber believes Graham-Cassidy is an improvement over the ACA. This is primarily due to two changes:

  1. The removal of the employer mandate to offer coverage. If that goes away, so too does the ACA’s definition of a full-time employee as someone working an average of 30 hours per week; this has negatively impacted businesses and workers – many of whom saw their hours reduced.
  1. The permanent elimination of the medical device tax, which is detrimental to vital Hoosier employers like Cook Medical in Bloomington, Zimmer Biomet in Warsaw and many others.

Overall, those in favor of increased state control are more receptive to the Graham-Cassidy effort.

As Vice President Mike Pence put it on Fox News yesterday: “…The question that people ought to ask is, who do you think will be more responsive to the health care needs in your community? Your Governor and your state legislator, or a congressman and a President far off in the nation’s capital?…”

 What has opponents worked up is two-fold: affordable coverage for pre-existing conditions isn’t specifically guaranteed; and population size will determine the amount of the block grant, which will reduce funding for a number of states – including some in the Rust Belt and more rural states in general.

Republican Sen. Jeff Flake of Arizona told MSNBC on Thursday he has absolute faith that governors will keep pre-existing condition protections, because of the severe political cost if they don’t. Opponents are less convinced.

At this point, Kentucky Sen. Rand Paul is the lone Republican who has sworn opposition to the Graham-Cassidy bill publicly – in part because his state appears to be set to lose funds in this model.

Likewise, Indiana is expected to see less federal dollars, but the Hoosier state has been preparing for what it saw as an eventuality for several years – setting aside hundreds of millions of dollars to subsidize its Healthy Indiana Plan (HIP) 2.0.

The HIP model is unique in the country; it requires participants to have “skin in the game” with their health care decisions and allows for capping the number of participants. Both of these make it an inherently more nimble program. And ultimately, the state Legislature can also determine to put more funds into HIP 2.0, if it’s deemed necessary.

These facts and the lure of more state control were likely factors in Gov. Eric Holcomb’s decision to sign a letter supporting Graham-Cassidy; he was one of 15 state executives to do so. The reality is other states may not be as fiscally prepared for a possible funding reduction as Indiana is.

That leads us to who may end up being the pivotal figure in the floor vote: Sen. Lisa Murkowski of Alaska. She joined Sen. Susan Collins (Maine) and Sen. John McCain (Arizona) in voting no on the last health care reform measure. Collins is seen as a likely “no” again, joining Paul, while McCain is a predicted (or at least hoped for) “yes.”

As a result, the bill authors are pulling out all the stops and making special accommodations for Alaska in the bill to woo Murkowski’s vote – because they can’t lose her and have the bill survive for Vice President Pence to break the tie. If no specific provisions for Alaska are made, the state would be a big loser in the bill in funding because of its size vs. population and geography.

The Indiana Chamber plans to talk about health care reform with Sen. Joe Donnelly, who has announced his opposition to Graham-Cassidy, and Republican Sen. Todd Young during Wednesday’s D.C. Fly-in event.

UPDATE: This afternoon, McCain announced he would oppose the Graham-Cassidy bill, making passage of the bill seemingly very difficult.

Donnelly, Walorski Working to Define Full-Time as 40 Hours Per Week

Since the passage of the Affordable Care Act (ACA), employers in Indiana and across the country have been forced to cut employees’ hours due to the law’s definition of a full-time employee as someone working an average of 30 hours per week.

The Indiana Chamber recognizes this as a significant issue for the Hoosier business community and has been pushing for a change back to the 40-hour work week. We are pleased to see that our delegation is leading efforts to make that happen.

Recently, Sen. Joe Donnelly reintroduced a bipartisan proposal that would change the definition of a full-time employee under the ACA to someone who works an average of 40 hours per week. Donnelly partnered with Sen. Susan Collins (R-ME) on this legislation.

Senator Joe Donnelly and Congresswoman Jackie Walorski greet Vice President Mike Pence as he arrives in South Bend to deliver the May commencement address at the University of Notre Dame (photo courtesy WSBT).

“I believe that we can work together to fix issues with the health care law and improve our health care system. I have heard from part-time workers across many industries, like school cafeteria managers to grocery store employees to adjunct professors at colleges, that have seen their hours cut to comply with the health care law,” Donnelly said.

“In Indiana, common sense holds that a full-time employee is someone who works an average of 40 hours a week, and the health care law should reflect that. I’m proud to partner with my friend and colleague Sen. Collins to reintroduce the Forty Hours is Full Time Act, and I am hopeful the Senate will consider this bipartisan bill soon.”

Meanwhile, a similar effort was introduced Thursday in the House led by Republican Congresswoman Jackie Walorksi (IN-02) and Congressman Dan Lipinski (D-IL).

The Save American Workers Act (H.R. 3798) also would restore the traditional 40-hour work week under the ACA.

“Obamacare’s burdensome employer mandate and its redefinition of full-time workers are hurting middle class American families and crushing our job creators,” Walorski said. “The Save American Workers Act will provide much-needed relief to hardworking Hoosiers who have faced reduced hours and fewer jobs. This bipartisan, commonsense bill will give businesses the certainty they need to create jobs, and it will give workers the opportunities they need to succeed.”

Background
The ACA currently requires employers with more than 50 full-time equivalent workers to offer health insurance to full-time employees (working 30 hours weekly) or face a penalty. This requirement has forced businesses to reduce hours and slow hiring in order to avoid unaffordable new costs or the ACA’s substantial fines. The 30-hour definition has affected workers in the private sector as well as city, state and school employees, with a particularly severe impact on hourly, part-time, and seasonal workers.

Commentary and Background on the DACA Decision 

President Trump announced last week via U.S. Attorney General Jeff Sessions that he is ending the Deferred Action for Childhood Arrivals (DACA) program that President Obama instituted in 2012 by executive order. DACA allows for certain illegal immigrants who entered the country as minors to receive a renewable two-year period of deferred action from deportation and eligibility for a work permit.

Under this decision, the U.S. Department of Homeland Security will rescind the executive order that established DACA and not accept new program applicants. It puts 800,000 “dreamers” (including an estimated 10,000 Hoosiers) – children who arrived in the U.S. illegally with their parents at a young age – into legal limbo until it takes effect March 2018. This is an unfortunate turn of events for a demographic group where 90% are either in college or working.

As a result, 15 state attorneys general (all Democrats) filed suit this week to block the President’s plan to end DACA.

During the announcement, Sessions commented that actions under the Obama administration were unconstitutional and that the program should be enacted by Congress. Even Sen. Dianne Feinstein (D-CA) implied that President Obama’s executive order to protect young immigrants brought here as minors was on shaky legal ground and that is why Congress must act.

Over the next six months, President Trump is counting on Congress to do just that and essentially fix the DACA situation once and for all.

The Indiana Chamber believes lawmakers must address the issue as part of a larger immigration reform package, but it remains unclear whether both sides can compromise to reach a solution. Some are adamant that they will not accept any deal to fund even small amounts of a border wall or increased immigration enforcement, and cuts to legal immigration would be unacceptable. Other members of Congress are saying you need to pass this as part of border security, while a contingent believes you need to pass this on its own – which makes the possibility of its success very difficult.

On Wednesday, Sen. Tom Cotton (R-AR) said he was open to adding legal status for DACA recipients to his RAISE Act legislation – the goal of which is to build a skills-based immigration system similar to Canada or Australia while decreasing the amount of legal immigration overall.

Indiana’s senators Joe Donnelly and Todd Young reacted to the DACA news.
“Our country is still in need of reforms to fix our immigration system and strengthen border security, but in the interim we should pass bipartisan legislation to give these young people, who were brought here through no fault of their own, some stability and clarity,” Donnelly said.

“Upending existing protections for the nearly 10,000 young people in Indiana who have been here for most of their lives isn’t the path we should take.” Young stated: “I continue to believe we must secure our southern border and fix our broken immigration system. Irrespective of (the Trump) announcement, that requires a bipartisan solution in Congress that reforms our legal immigration system, prevents illegal immigration and addresses the question of what to do with undocumented men, women and children already here.”

BACKGROUND

So how did we get to this point with DACA and immigration? It’s been many years in the making. Attempts to address illegal immigrants who entered this country as minors date back to as early as 2001.

In 2007, the DREAM (Development, Relief and Education for Alien Minors) Act was introduced in the Senate. The Act allowed for a process by which qualifying alien minors would first be granted conditional residency. Eventually, by meeting further qualifications, permanent residency status could be obtained. It failed to be brought up in debate for lack of a filibuster-proof 60 votes. In 2009, it was reintroduced in both the Senate and House, and provided for qualifying immigrants who were between the ages of 12 and 35 at the time of enactment; who arrived in the U.S. before 16 years of age; resided continuously in the U.S. for five years; graduated from high school or obtained a GED; and were of good moral character. The bill continued debate into 2010 when the House passed a version, but the bill again failed to reach the 60-vote threshold in the Senate. Unsuccessful attempts were made in 2011 as well.

As a result of Congress’ inability to pass legislation, the Obama administration by executive order implemented the policy position of DACA in June 2012.
In 2013, the U.S. Senate’s “Gang of Eight” passed a comprehensive immigration reform bill in the Senate. In 2014, the House indicated it had the votes to pass the bill. However, when House Majority Leader Eric Cantor lost his primary election, House Speaker John Boehner announced that the House would not bring the bill to a vote. As a result, President Obama promised to fix the immigration system as much as possible on his own without Congress and attempted to expand DACA to include the parents (known as DAPA) of these minors. In a memorandum to ICE (U.S. Immigration and Customs Enforcement), aliens without criminal histories were to be made the lowest priority and that illegal immigrants who are the parents of U.S. citizens or lawful permanent residents were to be granted deferred action.

Subsequently, the Texas attorney general – joined by 25 other Republican-led states, including Indiana – sued in federal court in Texas to prevent implementation of the expansion. The case eventually worked its way to the U.S. Supreme Court and in June of 2016, a deadlocked 4-4 decision stated that: “The judgement is affirmed by an equally divided court.”  The ruling set no precedent and simply left in place the lower court’s preliminary injunction blocking the program.

Earlier this summer, on June 15, 2017, then Homeland Security Secretary John F. Kelly signed a memo rescinding DAPA. At that time, it was clarified that the memo did not include DACA and the Trump administration had not decided on whether it would keep that policy in place.

Which brings us to action last week on September 5. Attorney generals from nine states – led by Texas – notified the Justice Department that they would amend the current DAPA lawsuit to include DACA if executive action wasn’t taken by September 5 to phase it out, which prompted the announcement by U.S. Attorney General Jeff Session.

Judge Strikes Down Obama-Era Federal Overtime Rules

A federal judge in Texas last week struck down an Obama-era federal rule on overtime pay that would have added to the regulatory burden and increased the salary threshold for overtime-eligible workers – thus increasing employers’ labor costs.

The rule would have made about 4 million people eligible for overtime that were not previously eligible and would have impacted the “white collar exemption” of the Fair Labor Standards Act.

Mike Ripley, Indiana Chamber vice president of health care and employment law policy, pointed to the overreach of the previous administration’s Department of Labor (DOL) rule and that the judge’s decision makes way for more reasonable agreement and discussion between employers and the DOL.

U.S. Chamber of Commerce President and CEO Thomas J. Donohue released this statement about the judge’s decision:

“(The) decision is another victory for the effort to free our economy from the regulatory stranglehold of the last eight years. We have consistently said that the last administration went too far in its 2016 ­overtime rule, and we are pleased that Judge Mazzant granted a final judgment that makes permanent his previous ruling against the overtime rule.

“This means that small businesses, nonprofits, and other employers throughout the economy can be certain that the 2016 salary threshold will not result in significant new labor costs and cause many disruptions in how work gets done. The Obama administration’s rule would have resulted in salaried professional employees being converted to hourly wages, reduced workplace flexibility and remote electronic access to work, and halted opportunities for career advancement. 

“We look forward to working with the Department of Labor on a new rule to develop a more appropriate update to the salary threshold.”

A coalition of national and local business groups challenged the rule in 2016 and the Indiana Attorney General’s office filed on behalf of the state of Indiana.

The Department of Justice this week dropped an appeal to save the rule after the judge’s decision.

We’ve Got New BizVoice For You!

The September/October edition of BizVoice magazine is now live!

We’ve highlighted venture capital, banking/finance/investments and Indiana innovation. Our own Tom Schuman also followed Indiana Congressman Larry Bucshon (R-8th District) for a day in Washington D.C. Read his story and the rest of the new content in the online edition.

You can also subscribe to receive a hard copy every other month.

What’s Up With Federal Tax Reform

Is anything really happening? Yes.
Will something eventually get passed? Probably.

A group of key individuals who dubbed themselves the “Big 6” has been meeting for a few months and more intently in recent weeks. They include two members each from the administration (Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn), Senate (Majority Leader Mitch McConnell and Finance Committee Chair Orrin Hatch) and House (Speaker Paul Ryan and Ways and Means Chair Kevin Brady.)

Are they motivated to find common ground? Certainly. Is there a consensus? Not yet. Right now, they don’t even agree on whether, or to what extent, the legislation must be revenue neutral.

But they all seem to recognize that they need to do something – failure to coalesce is not in anyone’s interest. So what have they agreed on so far? The border-adjustment tax is out. Some method for allowing the repatriation of overseas earnings (at a one-time low-rate tax) is in. The corporate rate must drop to 25% or less (depending on how many deductions and breaks they can eliminate.) They appear to be embracing a way to allow small businesses to immediately deduct investments in new equipment and facilities, i.e. “full expensing.” On the individual income side, a collapsing of the brackets and lowering of rates (no details.)

Possible tradeoffs or “pay-fors” in tax circles: eliminating some business interest deductions, eliminating the state and local tax (SALT) deductions and capping the mortgage interest deduction. These are yet unsettled issues. But listen and watch closely to the SALT discussions going forward; there is a lot of money and a lot of political (with a small p) interest in this item. It is more a geographic than partisan issue because taking the SALT deduction away will have a significant negative impact on people (constituents of Republicans and Democrats) in states that have high state and local taxes. This item could have a big bearing on the entire effort and whether we get true reform or temporary tax cuts.

Tax cuts are the easy part for these folks. The hard part is finding ways to pay for reductions. The last true tax reform was in 1986, 31 years ago, and it required a lot of time and bipartisan buy-in. The Big 6 are all Republicans and they are anxious to get something done. They could mimic the Bush tax cuts of 2002 and 2003, passed through the reconciliation process, which means whatever they do expires after 10 years. Somewhat ironically, most of those Bush cuts were only made permanent as part of the Obama budget deal of 2012.

To recap the status of tax reform: Much remains up in the air.