NAILBA Perspectives Perspectives Fall 2018 - Page 15

legislative update Bracing for the Blue Wave A MARK VALENTINI, MPP Mark Valentini, MPP is NAILBA’s former Director of Government Affairs and currently works as a lobbyist for a non-profit organi- zation in Washington, D.C. Mark has a Masters in Public Policy with a Concentration in Gover- nance Systems and Policy Man- agement from George Mason University and has worked in a variety of legislatives roles during his career. s I write this we are approx- imately a month out from Election Day. Polling indi- cates a Democratic majority taking back the House of Representatives with Senate Republicans keeping a razor-thin majority at best. Being an industry that generally leans Repub- lican politically, with policy positions generally favored by Republicans and some moderate Democrats, this should be concerning but not too troubling. I’ve mentioned in a pre- vious column that this industry has weathered past political storms pret- ty well; the waters might be rough, but the hull is sturdy. So, what to expect from a Con- gress ruled by Democrats? The same thing that happened when Repub- licans took back Congress in 2010. There will, naturally, be legislative attempts to undo the policy achieve- ments of the previous Congress and administration. House Democrats will be in no mood for compromise with the financial services industry consid- ering the scuttling of the Department of Labor’s fiduciary rulemaking earli- er this year. Dems are also going to have the daggers out for the tax re- form package (the Tax Cuts and Jobs Act of 2017) that was passed at the end of last year. It will be difficult for any legisla- tion coming out of a Democrat-ruled House to pass a Republican-con- trolled Senate. Even if Democrats take back the Senate, neither house of Congress will have veto-proof ma- jorities to overturn the tax reform law or any of its key provisions, much like what we witnessed when a Republican-controlled Congress attempted on numerous occasions to overturn the Affordable Care Act while President Obama was in office. While attempts to reverse course on recent tax reform will be unsuccess- ful, it will serve as the framework for repeal if the Democrats were to take both Congress and the White House in 2020. House Democrats will specifically target unpopular provisions of the tax law like the property tax deduc- tion cap, a provision designed specif- ically to hit “blue” states the hardest. The “pass-through” provision that al- lows up to a 20% deduction for LLCs, partnerships, sole proprietorships, and other small businesses might be spared if Congress takes a piecemeal approach to dismantling the tax re- form law rather than a wholesale re- peal. The pass-through provision is less controversial than the property tax cap but is still labeled by crit- ics as benefitting only the wealthiest Americans. Regardless of the hyper- bole, the pass-through deduction is a benefit to small businesses, includ- ing many NAILBA members and the agents with whom they work, and it is worth fighting for. On the regulatory side, the Secu- rities and Exchange Commission is working to expedite the implemen- tation of regulation best interest. While the issues surrounding stan- dards of care have been exhaustive, it’s not going to go away. Many in- dustry stakeholders view the current proposal as a much more balanced approach than that taken by the DOL. The proposed rule under this administration, while a bit costly with which to comply even by the agency’s own admission in its notice of proposed rulemaking, is viewed as watered-down by critics of the fi- nancial services industry. Even if the SEC succeeds in finalizing the rule, a Congress under Speaker Pelosi might not try to tank it but rather try to make it more stringent through leg- islative mandate. Rep. Stephen Lynch (D-MA) has already publicly stated the 408-page proposed rule is weak, and as one of the more senior mem- bers of the House Financial Services Committee, his words have influence, especially if his party takes back the House. Again, that legislation would have a hard time working its way through a Republican Senate, but it lays the groundwork for when the op- portunity avails itself to impose more stringent standards of care. Again, the industry has weathered the 2008 economic crisis, Wall Street reform, and attempts to force the DOL fiduciary rule, but not without vigorous advocacy and education. It’s not enough to simply say “no” to bad policy proposals but make the case about why it harms not only your business interests but also con- sumers. This requires salesmanship, a skillset you have all spent a lifetime honing, and using it to “sell” the idea that a strong and smartly-reg- ulated insurance industry is needed to promote and preserve a prosperous middle class. NAILBA and its industry partners are advocating for you on Capitol Hill and can help you facili- tate contact with your legislators to make the case for balancing industry and consumer interests. “We must free ourselves of the hope that the sea will ever rest. We must learn to sail in high winds.” -Aristotle Onassis www.nailba.org 15