How Does the 2014 U.S. Election Affect the Tech Industry

Post-‐Elec*on Webinar Analysis of Technology Policy in Lame Duck and the 114th Congress November 10th, 2014

2014 Elec*on Top-‐Line

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§  Senate –  Republicans: 52 –  Democrats: 46 –  2 Undecided Races: Alaska (sJll counJng votes) and Louisiana (Dec. 6th Runoff)

§  House –  Republicans: 244 –  Democrats: 184 –  7 Undecided Races

§  Governors –  Republicans: 24 –  Democrats: 10 –  2 Undecided Races

What This Means

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§  A return to deal-‐making? This year’s midterm results have shades of 1994, 2006 and 2010 rolled into one. The aQermath of each divided government outcome is beRer known for parJsan skirmishes yet sJll yielded surprising bouts of producJvity, starJng in the lame duck session though the following PresidenJal elecJon two years later.

§  Fiscal fights back in spotlight. Fiscal issues will reclaim center stage, starJng with the lame duck session. We expect Congress to temporarily extend the ConJnuing ResoluJon (CR) perhaps with a full-‐year updated spending bill or two aRached; renew a package of expired tax provisions with perhaps a few items made permanent; and pass a defense authorizaJon bill, possibly with cybersecurity-‐related provisions tacked on.

§  Deadlines drive the calendar. In 2015, the calendar will once again be driven by fiscal deadlines. The Congressional budget process may be restored to prevent further “legislaJve cliff” scenarios from occurring, but Republicans have to carefully weigh 2014 campaign promises vs an unfriendly 2016 electoral map in deciding how far they can push their favored policies.

Governors

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State Winner Oct. 31 Polling Averages Connec*cut

Alaska

Illinois

Colorado

Maine

Florida

Kansas

Wisconsin

Michigan

Georgia

MassachuseOs

New Hampshire

Rhode Island

Malloy (D) +2.5

SJll being tallied

Rauner (R) +4.8

SJll being tallied

LePage (R) +4.1

ScoR (R) +1.2

Brownback (R) +3.8

Walker (R) +5.7

Snyder (R) +4.2

Deal (R) +8.0

Baker (R) +1.8

Hassan (D) +5.6

Raimondo (D) +3.9

RCP: Foley (R) +0.5; HuffPo: Malloy (D) +0.5

RCP: Walker (I) +1.8; HuffPo: Parnell (R) +1.0

RCP: Quinn (D) +1.0; HuffPo: Rauner (R) +2.0

RCP: Tie; HuffPo: Hickenlooper (D) +0.8

RCP: LePage (R) +1.8; HuffPo: LePage (R) +0.4

RCP: Crist (D) +1.7; HuffPo: Crist (D) +1.0

RCP: Davis (D) +1.0; HuffPo: Davis (D) +2.8

RCP: Walker (R) +2.0; HuffPo: Walker (R) +1.8

RCP: Snyder (R) +2.8; HuffPo: Snyder (R) +1.3

RCP: Deal (R) +1.9; HuffPo: Deal (R) +3.4

RCP: Baker (R) +2.7; HuffPo: Baker (R) +3.7

RCP: Hassan (D) +6.6 ; HuffPo: Hassan (D) +2.4

RCP: Raimondo (D) +4.0; HuffPo: Raimondo (D) +7.7

Tightest Governors’ Race Results

Seats Up: 36 D: 10 Seats R: 24 Seats

House

§  Republicans gained 15 seats and lost 3 – for a net gain of 12 seats.

§  Democrats gained 3 seats and lost 15 – for a net loss of 12 seats.

§  12 Incumbents lost in the House – 2 Republicans and 10 Democrats.

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House CommiOees CommiOee Chair Ranking Member

Agriculture

Appropria*ons

Armed Services

Budget

Educa*on & the Workforce

Energy & Commerce

Financial Services

Foreign Affairs

Homeland Security

Judiciary

Natural Resources

Oversight & Gov’t Reform

Rules

Transporta*on & Infrastructure

Ways & Means

Intelligence

Michael Conaway (R-‐TX)

Harold Rogers (R-‐KY)

Mac Thornberry (R-‐TX)

Tom Price (R-‐GA)

John Kline (R-‐MN) OR Virginia Foxx (R-‐NC)*

Fred Upton (R-‐MI)

Jeb Hensarling (R-‐TX)

Ed Royce (R-‐CA)

Michael McCaul (R-‐TX)

Robert GoodlaRe (R-‐VA)

Rob Bishop (R-‐UT)

Jason Chaffetz (R-‐UT)

Pete Sessions (R-‐TX)

Bill Shuster (R-‐PA)

Paul Ryan (R-‐WI)

Devin Nunes (R-‐CA)

Collin Peterson (D-‐MN)

Nita Lowey (D-‐NY)

Adam Smith (D-‐WA)

Chris Van Hollen (D-‐MD)

Bobby ScoR (D-‐VA)

Anna Eshoo (D-‐CA) OR Frank Pallone (D-‐NJ)**

Maxine Waters (D-‐CA)

Eliot Engel (D-‐NY)

Bennie Thompson (D-‐MS)

John Conyers (D-‐MI)

Eni Faleomavega (D-‐American Samoa)

Elijah Cummings (D-‐MD)

Louise Slaughter (D-‐NY) OR Jim McGovern (D-‐MA)***

Peter DeFazio (D-‐OR)

Sander Levin (D-‐MI)

Dutch Ruppersberger (D-‐MD)

*Kline is term-‐limited but may get a waiver **Eshoo and Pallone are both vying for the slot ***Slaughter’s race was too close to call as of last night

Senate

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State Winner Oct. 31 Polling Averages Kansas

Georgia

North Carolina

Iowa

New Hampshire

Alaska

Colorado

Louisiana

Kentucky

Arkansas

Roberts (R) +10.7

Perdue (R) +7.9

Tillis (R)* +1.7

Ernst (R)* +8.5

Shaheen (D) +3.6

SJll being tallied

Gardner (R)* +4.2

Runoff Dec. 6

McConnell (R) +15.5

CoRon (R)* +17.2

RCP: Orman (I) +0.9; HuffPo: Roberts (R) +0.9

RCP: Perdue (R) +0.5; HuffPo: Perdue (R) +2.0

RCP: Hagan (D) +1.6; HuffPo: Hagan (D) +0.9

RCP: Ernst (R) +2.1; HuffPo: Ernst (R) +1.8

RCP: Shaheen (D) +2.8; HuffPo: Shaheen (D) +2.1

RCP: Sullivan (R) +2.2; HuffPo: Sullivan (R) +3.6

RCP: Gardner (R) +3.6; HuffPo: Gardner (R) +2.6

RCP: Cassidy (R) +4.5; HuffPo: Cassidy (R) +4.9

RCP: McConnell (R) +5.5; HuffPo: McConnell (R) +4.8

RCP: CoRon (R) +7.0; HuffPo: CoRon (R) +5.2 *Denotes GOP pickup

Tightest Senate Race Results

Senate CommiOees CommiOee Chair Ranking Member

Agriculture

Appropria*ons Armed Services

Budget Banking

Commerce Environment & Public Works

Energy Finance

Foreign Rela*ons Health, Educa*on, Labor & Pensions Homeland Security & Gov’t Affairs

Intelligence Judiciary

Pat Roberts (R-‐KS)

Thad Cochran (R-‐MS) John McCain (R-‐AZ) Jeff Sessions (R-‐AL) Richard Shelby (R-‐AL) John Thune (R-‐SD) James Inhofe (R-‐OK) Lisa Murkowski (R-‐AK) Orrin Hatch (R-‐UT) Bob Corker (R-‐TN)

Lamar Alexander (R-‐TN) Ron Johnson (R-‐WI) Richard Burr (R-‐NC)

Charles Grassley (R-‐IA)

Debbie Stabenow (D-‐MI) Barbara Mikulski (D-‐MD)

Jack Reed (D-‐RI) Bernie Sanders (I-‐VT) Sherrod Brown (D-‐OH)

Bill Nelson (D-‐FL) Barbara Boxer (D-‐CA)

Mary Landrieu (D-‐LA)** Ron Wyden (D-‐OR)

Robert Menendez (D-‐NJ) PaRy Murray (D-‐WA) Tom Carper (D-‐DE)

Dianne Feinstein (D-‐CA) Patrick Leahy (D-‐VT)

*GOP rules dictate a chair or ranking member must step aside aQer a six-‐year term ** If Landrieu loses re-‐elecJon, Senator Maria Cantwell (D-‐WA) would take her place

Elec*on Impact to the Tech Agenda

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§  Senate Commerce CommiOee SubcommiOee Chair Mark Pryor (D-‐AR) §  Key in helping to advance cyber security and data breach legislaJon. §  Strongly commiRed to tech and telecom issues. §  Moderate ally to Republicans on a number of issues.

§  Energy and Commerce SubcommiOee Chair Lee Terry (R-‐NE) §  Was working to advance data breach and noJficaJon legislaJon. §  Was working to advance patent demand leRer reform.

§  New CommiOee Leadership §  Senate Commerce CommiRee: Chairman Thune / Ranking Member Nelson §  Senate Judiciary CommiRee: Chairman Grassley §  Senate Homeland CommiRee: Chairman Ron Johnson §  Senate Finance CommiRee: Chairman Hatch §  Commerce subcommiRee on CommunicaJons: ? §  Energy and Commerce SubcommiRee on Manufacturing: ?

Lame Duck §  Appropria*ons: The current CR expires on December 11 and House and Senate appropriaJons

staff have been working to reconcile what differences on spending bills. Given that there is sJll no bicameral member-‐level agreement on subcommiRee spending allocaJons, it is likely that another temporary CR running through early 2015 (February or March) will become necessary. A full-‐year bill in early 2015 seem likely.

§  Internet Tax Freedom Act/Marketplace Fairness Act. A clean extension of the ITFA beyond the current December 11 expiraJon is most likely; backers will be seeking a longer extension, but any lengthy extension will draw efforts to tack on the Marketplace Fairness Act (MFA).

§  Defense Authoriza*on/AUMF/Cybersecurity. Defense authorizaJon likely gets done in the lame duck, parJcularly given the pending reJrement of Senate Armed Services Chairman Carl Levin (D-‐MI). The DoD authorizaJon bill has passed every year for the last 53 years, and there’s almost zero chance the streak is broken now.

§  Tax Extenders: Both parJes have expressed an interest in moving tax extenders, although the House Republicans and Senate Democrats remain at odds on how to proceed. Senate is most likely to win, especially given their two year approach and Sen. McConnell’s desire to complete the bill prior to the 114th Congress.

§  Big Ticket Items: With a new majority in the Senate, “big Jcket items” are likely to be punted unJl the 114th Congress.

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114th Congress: Historical Perspec*ve

§  Congressional History: Next year there may be similar factors in play to 2007, the first year Democrats reclaimed control of Congress to contend with the lame duck Bush AdministraJon.

§  Iraq War Supplemental §  College Cost ReducJon and Access Act of 2007 §  FY08 AppropriaJons Standoff §  Energy Independence and Security Act of 2007 §  Free Trade Agreements

§  President v Senate: The President’s desire for addiJonal legacy accomplishments combined with the Republicans’ ability to put legislaJon on his desk (via budget reconciliaJon procedures if and when the 60-‐vote threshold is unaRainable) will create pressure on the White House to negoJate.

§  The aQermath of each divided government outcome is beRer known for parJsan skirmishes yet sJll yielded surprising bouts of producJvity (1994, 2006, and 2010), starJng in the lame duck session though the following PresidenJal elecJon two years later.

§  Looming Elec*on: 10 Senate Democrats up for elecJon in 2016, while 24 Republicans face elecJon. Republicans have to carefully weigh 2014 campaign promises vs an unfriendly 2016 electoral map in deciding how far they can push their favored policies.

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Commercial Policy Updates

§  Patent Reform, MarJn Quigley

§  Immigra*on Reform, Randi Parker

§  Telecommunica*ons, MaRhew Starr

§  Interna*onal Trade, Burak Guvensoylar

§  Tax Reform, Lamar Whitman

§  Cybersecurity, Michael Spierto

§  Privacy, Joe Rubin

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Patent Reform Mar$n Quigley, TechAmerica

§  Patent reform is one of the more likely opportuniJes for a new GOP-‐controlled Senate to demonstrate that it can solve big, complicated policy challenges.

§  House Judiciary Chairman Bob GoodlaRe (R-‐VA), Senate Judiciary Chairman Chuck Grassley (R-‐IA), Senator Jon Cornyn (R-‐TX) and Senate Democrat Chuck Schumer (D-‐NY) would like to send a patent reform bill to the Senate.

§  The House and Senate will likely have a more unified front and have a leadership structure in the Senate that will be more moJvated to put legislaJon on the floor.

§  President Obama has already endorsed the House-‐passed legislaJon and could use patent reform as a legacy accomplishment.

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Immigra*on Reform Randi Parker, TechAmerica

§  There conJnues to be Republican chaRer about sending an immigraJon bill to the President before the 2016 elecJon.

§  Any movement to issue execuJve orders (which is likely) would significantly reduce the likelihood of Republicans working on a broad, bi-‐parJsan bill in the 114th Congress.

§  Republicans will likely find opportuniJes to demonstrate that they can make some targeted progress on issues ,including legal immigraJon/green cards and temporary work visas.

§  Sending the President a bill that he is forced to veto for lack of amnesty provisions may work to both sides’ benefit: Republicans show progress on moving an immigraJon bill and the President protects his base looking for broader reforms.

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Telecommunica*ons Ma8hew Starr, TechAmerica

§  House Republicans in the E&C CommiRee (Congressmen Walden & Upton) began soliciJng input from industry on Telecom Act reform in early 2014.

§  With Republicans now controlling both houses, they are expected to move forward with hopes of introducing legislaJon at some point during this session.

§  Senator Thune (Chairman of Senate Commerce CommiRee) has expressed interest in pursuing this.

§  Congresswoman Anna Eshoo (potenJal House E&C Ranking Member) is a telecom expert.

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Interna*onal Trade Burak Guvensoylar, TechAmerica

§  Legisla*ve Priori*es in Congress –  Trade PromoJon Authority –  Customs ReauthorizaJon –  Trade Secrets ProtecJons –  Miscellaneous Tariffs Bill –  Export-‐Control Reform –  Ex-‐Im Bank ReauthorizaJon (Expires June 2015)

§  Free Trade Agreements –  Trans-‐Pacific Partnership (TPP) –  Trade in Services Agreement (TISA) –  TransatlanJc Trade & Investment Partnership (TTIP) –  InformaJon Technology Agreement (ITA) –  Trade FacilitaJon Agreement (TFA)

§  Protec*onist Policies

§  Interna*onal Policy Mee*ng with USTR on November 20th at 10:00 AM

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Tax Reform Lamar Whitman, TechAmerica

§  Lame Duck –  Tax Extenders – 55, mostly business (E.g., R&D tax credit, IRC sec. 179, bonus

depreciaJon)

–  Internet Tax Freedom Act (Expires Dec. 11th)

–  Marketplace Fairness Act

§  114th Congress –  Senate Finance

§  Sens. Hatch and Wyden trade places

–  House Ways and Means §  Chairman Camp departs §  Reps. Ryan and Brady in running (Rep. Ryan favored)

–  Tax Reform: Both President and McConnell support, but with different emphases §  President Goal: $$ for infrastructure §  McConnell Goal: Reduce corporate rate to 25% to promote compeJJveness

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Cybersecurity Michael Spierto, TechAmerica

§  Prospects of moving Cybersecurity legislaJon during the lame duck is unlikely to be affected by the elecJon

§  New leadership on key cyber commiRees –  New chair/ranking member of HPSCI –  New chair of Senate Intelligence –  New chair of HSGAC

§  Smaller measures such as the DHS-‐centric NaJonal Cybersecurity and CriJcal Infrastructure ProtecJon Act, as well as workforce iniJaJves could be part of a final NDAA package

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Privacy Joseph Rubin, TechAmerica

ProacJve privacy agenda -‐ challenging data collecJon and use by the government

§  NSA Reform (possible Lame Duck consideraJon) §  ECPA Reform -‐ disappoinJng last Congress, but opJmisJc this congress §  Data breach noJficaJon and data security: Has been stymied by inclusion of

extraneous privacy issues (data broker and markeJng restricJons); a more narrowly targeted bill is likely

Defensive privacy issues §  Commercial data collecJon and usage policies are less likely to be a priority for

Congress. §  Senate Commerce CommiRee oversight has looked extensively at data usage

(data broker study; on-‐line markeJng), but it is less likely that incoming Chairman Thune will share those prioriJes.

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Q&A

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Public Sector Update

§ General Overview, Chris Dorobek

§  Federal Civil, David Logsdon

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Public Sector Outlook for 2015 Chris Dorobek

The Good

§  An end to budget brinkmanship?

§  McConnell: No budget shutdown, debt ceiling showdown

§  The larger quesJon: Will the GOP put provisions in spending bills that the White House could veto?

§  Normalcy in the budget process would be huge — enabling CIO & contractor planning

§  Will the GOP govern?

§  GOP priority: Government reform?

§  DOD could see some budget flexibility — maybe even more IT money

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Public Sector Outlook for 2015

The Bad

§  More oversight of the agencies — that impacts vendors as well (Remember HealthCare.gov hearings?)

§  Unlikely feds will see any pay raises – Impacts your business environment

§  GOP priority: Government reform? –  Comment already made that TSA will conJnue as “whipping boy”

§  Civilian agencies are unlikely to see any IT budget increases

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Groundhog Day

§  Fundamentals remain largely the same

§  Despite the dropping deficit, government remains in the age of ‘do more with less’ – No big spikes in IT spending w/o a game changer

§  The debate is likely to be defined by deficits, fiscal concerns

§  For government acquisiJons, lowest price is likely to conJnue to be a driver, despite frustraJons that it isn’t the best opJon for government

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Opportuni*es §  Tired of doing the same thing over and over again and expecJng different results?

§  InnovaJon has been a big driver in agencies — that is likely to conJnue

§  Budget pressures have been a big driver — that is unlikely to change

§  ARempts to improve the government IT acquisiJon process

§  GSA’s 18F conJnues to garner much focus

§  The new federal CIO — who will it be?

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Lame Duck – The current conJnuing resoluJon funds government through Dec. 11 — what will lawmakers do?

– The Federal IT AcquisiJon Reform Act (FITARA) — there is renewed effort to aRach this to the Defense AuthorizaJon Bill.

– IT/Procurement provisions in the Defense AuthorizaJon Act

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Federal Civil David Logsdon, TechAmerica

§  Ebola Funding –  Obama AdministraJon has asked Congress for more than $6 billion in emergency

funding. –  4.6 billion immediately, 1.54 billion as a conJngency fund.

§  $2.43 B for HHS, $1.98b for USAID –  Some of the funding will go towards either beefing up exisJng IT related

projects or funding new projects (several RFIs were posted this week).

§  Commercial Space –  AQer the Antares and Space Ship Two mishaps, expect oversight hearings from the

CommiRees of JurisdicJon.

§  Technology Convergence/Internet of Things –  Expect a few hearings in 2015 focused on a combinaJon of technology convergence and

IOT.

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Q&A

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For more informa*on contact:

Burak Guvensoylar Office: 202.595.3688 [email protected] TechAmerica.org

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How Does the 2014 U.S. Election Affect the Tech Industry

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