2016 State Of The Union Analysis:

President Obamas Priorities and the

Congressional Agenda
Jim Turner, L. Charles Landgraf,
Kevin M. ONeill, and Eugenia Pierson

January 2016

TABLE OF CONTENTS
Page
Introduction.................................................................................................................................................... 1
Analysis of State of the Union Topic Areas................................................................................................... 6
Healthcare ..................................................................................................................................................... 6
Energy and Environment............................................................................................................................... 8
National Security ........................................................................................................................................... 9
Cybersecurity .............................................................................................................................................. 10
Trade ........................................................................................................................................................... 12
Tax .............................................................................................................................................................. 13
Education .................................................................................................................................................... 14
Gun Control ................................................................................................................................................. 15

2016 State Of The Union Analysis:

President Obamas Priorities and the Congressional Agenda
Jim Turner, L. Charles Landgraf, Kevin M. ONeill, Eugenia Pierson
January 2016

Introduction
On January 12, 2016, President Barack Obama delivered his final State of the Union address, forcefully
making the case for the accomplishments of his administration to date and outlining his goals for his final
year in office. The President addressed a Republican Congress that is not only skeptical of his agenda,
but openly hostile to President Obamas efforts to use executive branch actions to usurp what
congressional Republicans consider their constitutional prerogatives. The President begins a State of the
Union rollout tour with trips scheduled for Omaha, Nebraska and Baton Rouge, Louisiana in an effort to
spur public support for major elements of his 2016 agenda.
Unlike earlier State of the Union speeches designed to primarily lay out the administrations priorities for
the year to come, President Obamas final address had a different feel. It was, in part, a nostalgic victory
lap, as he singled out themes and situations that influenced and informed his decisions for the last seven
years. Yet rather than simply recite a list of his greatest victories, President Obama used the speech to
outline plans to use his final year to extend and protect his administrations policy legacy. The President
also made it clear he will fight Congressional efforts to dismantle or undermine his signature policy
accomplishments.
The President touched on three major domestic themes in his speech: (1) achieving economic
opportunity for all; (2) using innovation to drive change in healthcare, energy, and the environment; and
(3) improving the political environment and democratic engagement of all citizens. In addition, President
Obama spent major portions of his speech discussing the challenges America has faced abroad and how
he intends to grow American influence in the world before leaving office. Each of the speechs major
themes has been a priority during President Obamas two terms in office, and are leading factors in
determining how history will judge the successes and failures of his administration.
The foreign affairs elements of the Presidents speech were aimed at defining his legacy abroad at a
highly volatile moment for American interests. President Obama reminded voters that the combination of
American economic power and our military capabilities mean the United States remains the essential
leader in solving almost any international dispute. He espoused a smart power approach that eschews
nation building for a more nuanced approach. The President saluted the efforts of the military and medical

communities to help stop the spread of Ebola in Africa, and renewed his pledge to close the Guantanamo
Bay detention center. President Obama focused on recent achievements and the potential for American
economic success from the pending Trans-Pacific Partnership trade agreement and the reopening of
diplomatic relationships with Cuba. In the Middle East, the President challenged Congress to authorize a
resolution of military force against ISIL while rejecting claims foreign terrorism poses an existential threat
to the nation. On the issue of nuclear proliferation, President Obama touted the long-term benefits of the
controversial agreement to delay Irans development of nuclear weapons.
In the economic prosperity and opportunity portion of his speech, President Obama reminded the nation
that he inherited the worst economic crisis in decades and that his policies have restored some of the
losses sustained in that crisis. The speech did not included any specific financial sector reforms but the
President placed the blame for the Great Recession squarely at the feet of Wall Street and big business.
As expected in a hotly contested election season, the President framed the vast majority of his economic
messages as creating the conditions needed for the middle class to thrive and grow. Many of his
proposals in this area were built around using education to climb the ladder of opportunity in America and
reprised policy priorities from recent years: expanded Pre-K, free community college, and improved
retraining opportunities for workers transitioning to new careers. The President also proposed wage
insurance to protect people from economic ruin as they move between careers, and he called on
Congress to reduce the annual cost of college instead of just restraining the growth of tuition over time.
President Obamas pivot to innovation to drive change in climate change, energy, and healthcare was
intertwined with both his economic prosperity message and his broader goals in foreign policy. President
Obama cited the recent Paris climate accords to highlight how the United States has used climate change
to improve our economy, preserve the environmental progress of the last eight years, and renew our role
as leaders in the international community. President Obama also presented the case for a number of
regulatory actions his administration is expected to take in its final year to solidify his environmental and
clean energy legacy.
As for the innovation portion of the speech, President Obama evoked the space race of the 1960s and
the associated public benefits to the United States in winning that innovation-based competition to
declare a moon shot for curing cancer and announced Vice President Biden will spearhead this effort
inside the federal government. While this campaign will surely include calls for inter-agency coordination
and massive new resources in the upcoming release of the proposed FY 2017 budget, it is less clear if
the President will look to clear away regulatory barriers that slow the process of quickly and effectively
bringing new treatments to market.

Other than the moon shot proposal, President Obama offered surprisingly little on healthcare. The
President framed the historic nature of passing the health reform law and reviewed the statistics that best
demonstrate how the law expanded coverage and access for millions of Americans, reduced the growth
rate of medial spending, and improved the general business environment.
Finally, President Obama discussed at length the need to fix the nations political discourse to allow more
citizens to fully engage in the democratic process. The President called for non-partisan redistricting of
Congressional seats to reduce political polarization, a reduction in the role fundraising plays in politics,
and general calls to make voting easier. It is unlikely any of these initiatives will be seriously debated in
2016.

What Was Missing?

The White House made it clear before the speech that this was a reflective, big-picture conversation with
the President as opposed to a wish list of policy priorities. Nevertheless, the speech surprised Senators
and Representatives for the small number of actionable ideas and initiatives it contained. President
Obama did not mention tax reform at all, even though Congress passed a major tax extenders package in
December on a strong bipartisan basis and there is growing interest in tackling international tax reform as
soon as this year. There was no real mention of transportation policy despite the fact Congress recently
passed a bipartisan long-term highway and transit bill that will be a significant driver of economic growth.
There is growing bipartisan interest in criminal justice reform that the President is likely to support and has
a chance to pass in 2016, but it was also not mentioned. It was surprising that President Obama did not
highlight his administrations leadership in seven years of growing policy and legal victories for LGBT
Americans. There also were expectations that immigration reform and gun control would receive more
attention in the speech, given the priority the President places on those topics.

Congressional Reaction and Legislative Plans for 2016

Congressional reaction to the Presidents speech was mixed, as one would expect when facing a House
and Senate controlled by the opposite party. Republicans gave a muted reception to the recitation of the
greatest hits of the Obama Administration, and plan to use the legislative process this year to reverse or
minimize the impact of many of the Presidents pending regulatory and executive actions. As the 2016
campaign season ramps up, some congressional Democrats also will begin to further distance
themselves from the President if doing so is necessary to improve their own election prospects.

Even as the public considers Washington to be in a perpetual state of gridlock, 2015 was quietly and
surprisingly an effective year for legislative success in Congress. In a bipartisan fashion Congress
completed major legislation such as Medicare physician payment reform, a long-term highway bill, tax
extenders, trade promotion authority, reauthorization of elementary and secondary education programs,
and cybersecurity improvements. The year ended with an omnibus appropriations bill that lifted the
Budget Control Act spending caps and provided a two-year agreement that should make it easier to
handle the upcoming FY 2017 appropriations process. Now the question will be whether the momentum
of 2015 can continue into an election year.
New Speaker of the House Paul Ryan (R-WI) will be a pivotal congressional figure in 2016 as he
balances competing objectives. The Speaker has committed to introducing a comprehensive agenda
early this spring on major issues like tax reform, fighting poverty, a replacement for the Affordable Care
Act, trade policy and reinvigorating national defense resources. In doing so, the Speaker hopes to provide
a platform of ideas to be adopted by the eventual Republican presidential nominee later this summer. The
Speaker wants to introduce big policy ideas to give voters a pre-election preview of what an allRepublican Washington could accomplish it they take back the White House and retain control of the
Senate. But the Speaker knows it may be counterproductive to his partys short-term electoral interests to
vote on major ideas this year that are destined to die by filibuster in the Senate or be vetoed by President
Obama. We believe the Speaker will avoid putting vulnerable incumbents in the position of taking tough
votes on legislation he knows cannot become law this year.
2016 marks the tenth and final year both Harry Reid (D-NV) and Mitch McConnell (R-KY) have served
together as their partys respective top leaders in the Senate, and the scars built up by the battles of
years past will make the legislative process very difficult this year. Senator Reid will retire at the end of
this Congress, likely to be succeeded as Democratic Leader by Senator Chuck Schumer (D-NY). Senator
Reids primary mission in his final year will be to prevent legislation that challenges the Presidents
accomplishments in any respect and to undermine any legislative momentum created by House
Republicans.
Conversely, Senator McConnell must navigate treacherous waters in his second year as Majority Leader.
His majority is squarely in play, as Republicans defend 24 of the 34 seats up in 2016, and many of those
incumbents hold seats in states won once or even twice by President Obama. Thus, Senator McConnell
must pick his legislative priorities carefully and make good use of the time available on a tight legislative
calendar. Senator McConnells vow to maintain regular working order will be threatened by the minoritys
ability to turn any debate into a chance to force vulnerable incumbents into casting tough votes on

controversial issues. Regardless of the pace of legislative activity, Senator McConnell is likely to continue
last years slow confirmation process for Presidents Obamas judicial and executive branch nominees.
We expect the 2016 legislative session to be broken into three distinct phases of what is a relatively short
legislative year, especially before the election.

The first phase will last until perhaps Memorial Day and presents an excellent chance for
Congress to actually legislate before election season begins in earnest.

The second phase will run through the summer, with the earlier political conventions, until the
election in November. During this phase of the year, the congressional focus will be on
hearings and legislative actions that draw the sharpest contrasts between the political visions
of the two parties, as opposed to actually passing legislation that can become law. During this
portion of the year, there will be critical behind the scenes maneuvering to set up the end
games for major legislation to move at the end of the year. If leading economic indicators
visibly deteriorate in the first four months of 2016, the summer months may feature
congressional debates about the merits of the economic plans of the leading presidential
candidates.

The final phase of the legislative year will be the post-election lame duck session, when we
expect conditions to exist for major legislative compromises, especially if control of the White
House or Senate changes hands in the election.

Regardless of other priorities, Republicans in both chambers of Congress will continue to look for
opportunities to use the legislative process to restrain the Presidents ambitions in the final year. The
Obama Administrations legacy-building now hinges in large part on its ability to finalize pending major
rulemakings in such sectors as energy, telecommunications, healthcare, financial services, labor, and
education, and the race is on to complete those regulations this year. Meanwhile, Republicans in
Congress will use the legislative process to restrain what it perceives as executive overreach on many of
these proposed rules. Republicans will also attempt to use the Congressional Review Act (CRA) to
overturn some of the more controversial rulemakings of the Obama Administration. Successful use of the
CRA requires a substantial number of Democrats to vote against the Presidents interests and overrule an
expected veto. Perhaps the most likely instance where that could occur in 2016 would be the pending
Department of Labors fiduciary rule, where numerous Democrats have already supported legislative
efforts to prevent implementation of this rule.
In yet another election cycle where being an incumbent may prove to be a liability (polling data continues
to show most voters consider America on the wrong track, a sobering prospect for incumbents), members

of both parties in Congress have incentives to build on last years productive session and demonstrate to
voters a longer list of bipartisan accomplishments. Many of the major policy challenges Congress is likely
to prioritize in 2017 will have their genesis in hearings and legislative activity that takes place in 2016,
making it very important to be engaged on these issues at the beginning stages of the legislative debate
this year. We also think the post-election lame duck session has the opportunity to be extremely
productive, as Congress may choose that moment to finish work on the Trans-Pacific Partnership,
elements of international tax reform, the package of annual spending bills, and other legislative priorities.

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Analysis of State of the Union Topic Areas

Below our State of the Union summary provides you with an analysis of the Presidents proposals in
major policy areas and how we expect Congress to address these proposals in the remaining year of the
Obama Administration.

Healthcare
2016 Snapshot: President Obama is unlikely to tackle any additional major new healthcare reform
policies, but is certain to continue strengthening program integrity in the ACA, smoothing implementation

of the ACAs payment and delivery system reforms, and working with states to expand Medicaid coverage
wherever possible. His health care policy priorities in 2016, however, have shifted to focusing on scientific
breakthroughs that will alleviate the burden of chronic and disabling diseases on families and the
economy.
Although President Obama referenced his signature healthcare reform law during his final address, he
pivoted to the moon shot goal of finding a cure for cancer as the centerpiece of his health care priorities.
The FY 2016 omnibus bill ended a long drought for the National Institutes of Health by increasing the
agencys medical research budget to US$32.1 billion, including additional funding for cancer research and
the Precision Medicine initiative launched by the President in last years address. The White Houses
heightened focus on accelerating the pace of research comes as scientists are making breakthroughs in
understanding cancer genetics and developing new drugs that can prolong lives, and Congress is
working on legislation to expedite drug and device approvals, increase interoperability of health records,
and simplify clinical trial requirements.
The Houses 21st Century Cures Act passed by an overwhelming 344-77 vote in the House last year. We
expect the Senate Committee on Health, Education, Labor, and Pensions (HELP) to unveil more details
on its parallel initiative, the Innovation for Healthier Americans Act, in the coming weeks. The Senate bill
offers healthcare industry stakeholders an opportunity for continued input on a variety of issues including
research funding, health information technology, clinical trial regulation, and drug and device approval
pathways. At a minimum, the work invested in the House and Senate Cures proposals are building a
foundation for the next round of FDA user fee legislation, which programs must be reauthorized in 2017.
At the same time, the Chronic Care Working Group, led by Senators Johnny Isakson (R-GA) and Mark
Warner (D-VA), is focusing on consensus approaches to contain cost and improve outcomes for Medicare
beneficiaries living with multiple chronic conditions. The Working Group is currently soliciting feedback on
a series of policy proposals. We expect them to introduce and seek to move legislation in the 2016
session.
In his final address to Congress, President Obama emphasized the leadership role the United States
continues to play in global health security, reminding his audience of the United States key role in
mobilizing a global response to the Ebola epidemic in West Africa. He also highlighted the need to
address the prescription drug and heroin abuse epidemic in the country. Congressional interest in
addressing the crisis aligns with that of the administration, with bipartisan momentum growing for
legislative solutions, and new funding available in the omnibus targeting the drug ep in high-risk
communities.

While the President did not address prescription drug costs as contributing to increased healthcare costs,
we expect drug pricing, as a key factor in rising healthcare costs, to remain on the congressional agenda
and a discussion point on the campaign trail. Last year, the Centers for Medicare and Medicaid Services
(CMS) made public the spending data for the most expensive drugs in Medicare Part B and Part D. CMS
is likely to release similar data on Medicaid in 2017 to improve drug pricing transparency for researchers
and the public.
Of course this year also marks the Obama Administrations last opportunity to prevent erosion of reforms
made by the Affordable Care Act (ACA). While Republicans continue to seek wholesale repeal and
develop an alternative, they are also working to gain Democratic support for dismantling some of the
ACAs financing mechanisms, including permanent repeal of the medical device tax and the Cadillac tax.

Energy and Environment

2016 Snapshot: The Obama Administration will focus on implementing key elements of the Climate
Action Plan, including regulatory efforts to reduce greenhouse gas emissions from new and existing
power plants, while Republican congressional leaders will attempt to thwart that effort via traditional and
non-traditional tools. At the same time, expect a bipartisan group of legislators to focus on passing more
narrow US energy policy reforms that focus on US electric policy, energy export policy, and energy
efficiency.
President Obama called for an aggressive commitment to clean energy development and transition from
fossil energy resources. In doing so, the President touted several results from his administrations sevenyear record in this area, including support for the American Recovery and Reinvestment Act of 2009s
investments in clean energy sources, a 55-percent net reduction in petroleum imports, and overall
stewardship over US carbon emission reduction that, the President argued, leads the world. President
Obama indicated, however, that he will not rest on these laurels in 2016. Instead he called for a renewed
commitment to ensure that these results continue beyond his administration and announced regulatory
initiatives, including plans to revise regulations that govern land and royalty revenue management policies
for coal and oil production, that the President asserts will better reflect costs that traditional energy
production imposes on taxpayers and our planet.
A number of items associated with the Presidents calls to action are already well underway and reflect
foundational tenants of the Presidents Climate Action Plan first revealed in June of 2013. In January of
2015, for example, the Department of Interiors Office of Natural Resources Revenue proposed to revise
royalty valuations for oil, gas, and coal produced from Federal on and offshore leases and in turn
generate additional revenue for the Federal Government. Additionally, the Environmental Protection

Agency (EPA) continues pushing forward with steps to implement the Clean Power Plan, which aims to
dramatically curb greenhouse gas emissions from new and existing power plants. Finally, the State
Department and other members of the administration will coordinate the US effort to implement an
international agreement known as COP-21, an agreement signed by 195 nations in December of 2015
designed to combat climate change and reduce global greenhouse gas emissions. Additional elements of
the Climate Action Plan will continue on in aid of these regulatory efforts and beyond.
President Obamas agenda will meet with intense opposition from a Republican-led Congress intent on
eviscerating elements of the presidents major agenda items. Senate Majority Leader McConnell (R-KY)
and House leadership remain committed to exercising traditional appropriations, authorization, and nontraditional tools including the Congressional Review Act to block implementation of the Clean Power Plan
while litigation attacking various aspects of the final rule wind their way through the courts. Additionally,
Republican legislators will likely attempt to chip away at the presidents authority to implement the US
commitments under the COP-21 agreement in addition to the Interior Departments royalty revenue
proposal, which the administration hopes to finalize before the end of the Presidents term.
At the same time, senior leaders on both sides of the Capitol will pursue less partisan efforts to reform US
electricity policy, liquefied natural gas export policy, and policies designed to improve and promote energy
efficiency through the North American Energy Security and Infrastructure Act of 2015 (H.R. 8) and the
Energy Policy Modernization Act of 2015 (S. 2012) offered by House Energy and Commerce Committee
Chairman Fred Upton (R-MI) and Senate Energy and Natural Resource Committee Chairman Lisa
Murkowski (R-AK), respectively. Each bill seeks to amend US energy policy in a narrowly tailored yet
comprehensive package that both enjoy at least a modicum of bipartisan support.

National Security
2016 Snapshot: The Presidents ability to direct US foreign policy remains tempered by frequent
confrontations with Congress, and that is likely to continue in 2016.
President Obama spent a good part of his address on national security, and his comments were clearly
aimed at responding to rhetoric coming from some Republican presidential candidates. While the
President emphasized the importance of destroying terrorist networks such as ISIL, he stressed the need
for the US to use a patient and disciplined strategy that can include coalition building, sanctions, and
diplomacy to meet global challenges. President Obama asked Congress to provide him with an
authorization for use of military force (AUMF) against ISIL, and House Speaker Paul Ryan (R-WI)
appears to be supportive of pursuing such a vote. Nevertheless, the fact an AUMF vote on ISIL did not

have enough political support to proceed in a non-election year indicates how difficult the politics on that
vote can be for both parties.
The President used the Iran nuclear deal as an example of how engagement and sustained dialogue can
result in a breakthrough agreement on security issues. The President left little doubt that he viewed the
Iran deal as a part of his legacy that reduced the long-term outlook for nuclear proliferation and strife in
the Middle East.
The President also used his speech to again call for the closing of the Guantanamo Bay detention facility
used to house enemy combatants, but he faces strong opposition on this issue from a bipartisan group in
Congress. As in years past, we expect that Congressional opposition through this years National
Defense Authorization Act (NDAA) and the defense appropriations bill to block the transfer of enemy
combatants from Guantanamo Bay to military or civilian facilities in the United States.
Additionally, the Presidents speech took direct aim at China and Russia by stating America remained the
primary leader in solving problems in the international community. He also made the case for America
continuing the type of global leadership he has exerted in places like Syria where he has avoided
putting troops on the ground as opposed to engaging in the nation-building strategies espoused by
President George W. Bush.
The Presidents foreign policy, be it on Syria, ISIL, Iran, or some other challenge, has plenty of critics on
Capitol Hill. For the reasons stated above, it is far from clear that he would win a vote on an AUMF
against ISIL or any other major military effort. Additionally, the Iranian nuclear deal remains controversial
on both sides of the aisle, particularly in light of this weeks short hostage situation and the recent missile
tests conducted by Iran in defiance of certain UN Security Council resolutions.
As a result, we expect Congress to continue to assert its role in foreign affairs in a number of ways in the
coming year. For example, the House passed legislation this week that would impose harsher sanctions
on North Korea in response to its recent nuclear tests. We also anticipate that the coming implementation
of the Iran nuclear deal will spark confrontations between the White House and Congress on the issue of
whether sanctions on Iran can, or should, be eased.

Cybersecurity
2016 Snapshot: Although President Obama did not mention cybersecurity in his State of the Union
address, the White House will take action soon as it releases its cyber incident response plan to clarify
the federal roles for responding to cyber attacks. Congress plans to capitalize on its success with

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information sharing legislation to continue its work on other cyber legislative priorities and oversight in the
coming year.
The Obama Administration has made cybersecurity one of its priorities, yet the President did not highlight
any of his initiatives in his address. In previous speeches, President Obama called on Congress to pass
cybersecurity information sharing legislation, which it accomplished in December by including the
Cybersecurity Act of 2015 as part of the FY 2016 omnibus appropriations bill. Although it was not
mentioned in his speech, the White House announced this week that it is developing a cyber incident
response plan that will provide guidance to the federal government on how to respond to a major cyber
attack on the nations critical infrastructure. The plan will be released within the next 90 days as an
executive order or a presidential policy directive and is expected to include specific roles and
responsibilities for each federal agency in the event of a cyber attack.
Congress is putting pressure on the Obama Administration to improve cybersecurity after the Office of
Personnel Management (OPM) cyber breach revealed last summer affected over 22 million current and
former government employees. Congress wants the Obama Administration to have a plan in place to
respond to future cyber attacks and data breaches that occur on federal networks and to any of the 16
sectors of the economy defined as critical infrastructure (e.g., financial services, information technology,
energy, etc.). Additionally, the Department of Homeland Security (DHS) is in the process of updating its
cyber incident response plan to reflect the best practices and lessons learned from the OPM breach and
cyber attacks against major US companies like Sony, Target, and others. Many in Congress support the
release of a government-wide cyber incident response plan. We expect committees with jurisdiction over
cyber issues will closely scrutinize any plan as it is implemented.
After the success it achieved last year with the passage of cybersecurity information sharing legislation,
Congress will play an oversight role to ensure DHS properly implements the legislation while also working
on other cybersecurity legislative priorities in the coming year. House Homeland Security Committee
Chairman Michael McCaul (R-TX) is working with DHS, including the National Protection and Programs
Directorate that has jurisdiction over cyber issues, to reorganize the department to allow it to more
effectively and efficiently carry out its cyber duties. He plans to release legislation in March that would
authorize DHSs reorganization, which has been a priority for him given DHSs attempts last year to
reorganize itself without explicit authorization from Congress. Chairman McCaul also plans to introduce a
bill that would create a national commission to study how law enforcement and public safety officials can
operate effectively in the digital age and in response to cyber threats.

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Senate Select Committee on Intelligence Chairman Richard Burr (R-NC) and Vice Chair Dianne Feinstein
(D-CA) also are looking to introduce legislation focused on the use of social media by terrorist groups that
recruit followers and propagate terrorist messaging online. The legislation is likely to address the role of
encryption since US intelligence agencies have long sought a mechanism that would permit government
access to encrypted data, warning about the rising Going Dark problem where criminals and terrorists
may use encryption to avoid surveillance and detection. The House Energy and Commerce Committee
likely will move its data breach notification and data security legislation this year as well.

Trade
2016 Snapshot: The Presidents trade agenda faces significant challenges in 2016, but there is a chance
that Congress may consider the TPP before the year is over.
President Obama briefly touched on two trade matters in his speech. He urged Congress to approve the
Trans-Pacific Partnership (TPP) agreement, indicating that it cuts 18,000 taxes on products Made in
America and would allow the United States, rather than China, to set the rules in the region.
Separately, President Obama urged Congress to lift the trade embargo on Cuba, arguing that it would
consolidate our leadership and credibility in the Western Hemisphere.
The Presidents trade agenda remains a difficult sell on Capitol Hill, and the opposition does not fall along
traditional party lines. The TPP is opposed by many Democrats, and is a source of great criticism by
Democratic presidential candidates on the campaign trail. Many of the Democratic partys leading interest
groups labor unions, environmentalists, human rights organizations have concerns with the TPP that
make it more difficult to build political support inside the Presidents party.
Republicans have their own set of challenges on the TPP. While many Republicans voted in favor of
giving the President the fast track negotiating authority for the agreement, several have expressed
concerns about various details of the final deal. Highlighting the uncertainty surrounding TPPs prospects,
in December House Speaker Paul Ryan (R-WI) expressed hope that the deal could be voted on as soon
as possible, but those comments came just days after Senate Majority Leader Mitch McConnell (R-KY)
warned the President that he would be making a mistake to seek a vote on the deal before the 2016
elections. The US Chamber of Commerces endorsement of the TPP suggests a path for Congress to
ultimately get comfortable with the deal and vote for it, but we think such a vote is likely to occur in the
lame duck session when the electoral ramifications of the vote are minimized.
As for the prospects of lifting the Cuba embargo, we think Congress is not ready to move that quickly and
will be looking for more incremental changes. We expect to see a growing number of Senators and

12

Representatives engage on Cuban issues going forward, and to visit the country themselves to determine
current conditions and future opportunities. Although President Obama called for lifting an embargo, it is
clear the votes to do so are not yet in place.
Despite uncertain prospects for completion of either agenda item, we expect several congressional
committees to examine both the TPP and Cuba policy in detail throughout the year, which can help lay
the groundwork for further action in the next administration.

Tax
2016 Snapshot: A tax code overhaul is not expected to pass the Congress in 2016, though some
proposed reforms could be considered, notably international tax code reform.
President Obama opened his speech by thanking House Speaker Paul Ryan (R-WI) for his constructive
approach to making tax cuts permanent for working families in 2015, and mentioned throughout his
speech the need to strengthen the middle class through tax reform. The tax extenders package passed in
December provides proof that a bipartisan effort on tax code changes can succeed, but it also may make
it more difficult for a tax package to pass this year because there are fewer urgent tax issues that need
to be addressed. In making the case for the Trans-Pacific Partnership, President Obama stressed that the
agreement would lead to 18,000 cuts to taxes on products made in America, along with supporting
domestic job growth.
Major tax legislation is often considered more difficult to move in election years. Nevertheless, the White
House and Congress know the tax code is now an active hindrance to investment and growth at all levels
of the American economy. The continued use of corporate inversions to move companies abroad for tax
purposes is just one example of how tax policy is a leading contributor to the sluggish economic recovery.
While Senate Majority Leader Mitch McConnell (R-KY) has said that tax reform will not happen during this
administration, Speaker Ryan has focused his policy interests on fundamental tax reform and he will
surely try to make progress on that goal in his first year running the House. In the Senate, Finance
Committee Chairman Orrin Hatch (R-UT) announced he intends to introduce a tax reform package in the
next few weeks aimed at addressing inversions and other issues. In addition, newly installed House Ways
and Means Committee Chairman Kevin Brady (R-TX) said this week he would like to move on
international tax reform this year. Chairman Brady anticipates a vote on international tax code reform
because of bipartisan support and the need to lower the gates for international profits to flow back into the
US. Chairman Brady views international tax reform as a precursor to a larger tax code reform, though he
also believes that comprehensive tax reform will occur under the next administration. Even if that effort

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fails to get to the Presidents desk in 2016, it sets the table for further action on more comprehensive tax
reform in 2017.

Education
2016 Snapshot: The Presidents calls for universal Pre-K and free community college will largely go
unaddressed on Capitol Hill. Congressional leaders will wait to review progress of the new HHSadministered preschool development grant program and will continue to argue that states (not the Federal
Government) should determine what is best in terms of lowering the cost of college at their public
institutions. The President also said the country should work to recruit and support more great teachers, a
task that will largely fall on the Department of Educations actions this year, including through its Teach to
Lead initiative and its final rule on teacher preparation (expected to be released later this month).
Additionally, Acting Secretary John King will launch a month-long Opportunity Across America tour
tomorrow, which includes a focus on supporting and lifting up the teaching profession.
In his speech, President Obama discussed his priorities for building on education opportunities where
progress already has been made. While he praised the December 2015 passage of the Every Student
Succeeds Act (ESSA), which reformed No Child Left Behind, he focused on the work yet to be done on
either side of that legislation specifically calling for universal Pre-K and free community college. A year
ago, President Obama proposed making two years of community college free for certain students, and in
September 2015, he tasked Dr. Jill Biden to lead an advisory board to help push the idea. In his address,
he committed to continuing the fight this year to get the plan underway, as he believes it is one of the best
ways to tackle the rising cost of college.
Additionally, the President has called for a universal Pre-K program since 2013, when he rolled out a plan
that included a series of competitive grant programs to improve quality and expand access to early
learning programs. President Obama also touched on the importance of providing students with
opportunities in computer science, bringing high-speed internet access into schools, as well as bolstering
graduates in Science, Technology, Engineering, and Mathematics (STEM) fields. Recent changes under
the new ESSA law will provide greater flexibility for teachers and states to use STEM funding for
computer science programing and professional development.
Last year, Senator Tammy Baldwin (D-WI) and Congressman Bobby Scott (D-VA), both key leaders on
education issues, introduced legislation backing the Presidents free community college plan.
Republicans, however, have expressed concerns with the plan, including Senate Health, Education,
Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) who believes that such plans
should be developed at the state level. As for Congresss focus on Pre-K expansion, we do not expect

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much movement. While ESSA includes a preschool development grant program (handled by the
Department of Health and Human Services (HHS) instead of the Department of Education) and makes it
easier for states to incorporate early learning by accessing Title I funds, it did not enact a universal Pre-K
program. Despite the fact that most Democrats would like to see more support for early learning, many
congressional Republicans think ESSA went too far on its preschool grant program and do not have the
appetite to continue to expand the program.
While Congress is unlikely to further develop either plan, the Obama Administration could look for ways to
make progress on its Americas College Promise proposal in the coming year, potentially establishing a
pilot program incentivizing states or schools offering two years of free community college. While members
of Congress would like to demonstrate to voters they are tackling the issue of college affordability in some
respect this year, a Higher Education Act (HEA) reauthorization bill is unlikely to pass both chambers and
be signed into law this year. It is still possible that a draft discussion bill will be released or for several
discrete pieces of legislation to move, including one around financial aid.

Gun Control
2016 Snapshot: The Presidents executive actions on gun control will face significant challenges by
congressional Republicans who will use the FY 2017 appropriations process to deny the Presidents
funding requests on this issue. Congress may pass legislation improving mental health programs as part
of addressing this issue. We also expect some interest groups to pursue legal action against the Obama
Administration to try to stop the Presidents executive actions on gun control.
In his speech, President Obama vowed to keep pushing his agenda to reduce gun violence. In the week
leading up to his speech, the President issued several executive actions on gun control, which broadly
interpret the definition of gun dealers to require more background checks, modernize the National Instant
Criminal Background Check System (NICS), and seek increased funding for law enforcement, mental
health care, and gun safety technology. These actions, however, are not the Obama Administrations first
to address gun control. In January 2013, the President issued 23 executive actions on guns, which
included providing greater incentives for states to share information on background checks and
instructions to the US Attorney General to participate in the review of individuals restricted from gun
ownership.
The Presidents executive actions will face roadblocks from conservatives in Congress and a possible
reversal by a future Republican administration. House Speaker Paul Ryan (R-WI) called the Presidents
actions a distraction and emphasized the need for a Republican presidential win. While legislation to
overturn the actions is unlikely given the Presidents veto power, Congress does have authority to deny

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the Presidents funding requests needed for executive branch agencies to carry out the Presidents gun
control directives. Rep. John Culberson (R-TX), Chairman of the Appropriations Subcommittee on
Commerce, Justice, and Science, has expressed his readiness to defund line items in the Department of
Justices budget that would support implementation of the executive actions. Additionally, legal
challenges to the Presidents executive actions will largely depend on regulatory actions at the Bureau of
Alcohol, Tobacco, Firearms and Explosives (ATF).
A priority of House Republican leaders will be moving The Helping Families In Mental Health Crisis Act
(H.R.2646) introduced by Rep. Tim Murphy (R-PA). Republican leaders want the bipartisan bill to pass
through the House Committee on Energy and Commerce quickly to show their support for improvements
in access to mental health care. The bill, with more than 150 cosponsors, would expand mental health
programs, training, and Medicaid coverage. It also would create a new office to oversee all federal mental
health programs. In the Senate, Majority Leader Mitch McConnell (R-KY) has indicated there is bipartisan
interest in moving mental health legislation in 2016. It is expected to be a combination of several existing
bipartisan bills introduced by Senators Lamar Alexander (R-TN), Patty Murray (D-WA), John Cornyn (RTX), Bill Cassidy (R-LA), and Chris Murphy (D-CT).
If you have any questions about any of the topics discussed in this advisory, please contact your Arnold & Porter attorney or any of
the following professionals:

Jim Turner
DC: +1 202.942.5181
Houston: +1 713.576.2400
Jim.Turner@aporter.com
L. Charles Landgraf
+1 202.942.6408
Charles.Landgraf@aporter.com
Kevin M. ONeill
+1 202.942.6563
Kevin.ONeill@aporter.com
Eugenia Pierson*
+1 202.942.6564
Eugenia.Pierson@aporter.com

2016 Arnold & Porter LLP. This Advisory is

intended to be a general summary of the law and
does not constitute legal advice. You should
consult with counsel to determine applicable legal
requirements in a specific fact situation.

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