Personal Finance: Low hanging fruit for new Republican majority

photo Chris Hopkins

Republicans had an undeniably good night on Nov. 4, recapturing control of the U.S. Senate and attaining the largest number of House seats since the Great Depression. And while a brief celebration would be understandable, the results convey a substantial burden of responsibility to the victorious GOP. Now they must prove that they are capable of governing.

In that vein, a few early successes would go a long way toward legitimizing the new leadership's claim on the levers of legislative power. Finding some degree of common ground with the President on a limited number of important issues is a critical prerequisite to more ambitious policy initiatives before the 2016 elections. Fortunately, a few important proposals enjoy a degree of bipartisan support and could be quickly enacted.

Trade policy is one area ripe for compromise. Two important multilateral treaties are being negotiated by the Administration with the support of President Obama and a majority of Republicans in the Senate. The current majority leader Harry Reid has held up consideration of authority to conclude negotiations, but incoming leader McConnell has signaled a willingness to move forward.

The Trans-Pacific Partnership (TPP) is a sweeping pact between the United States and 11 Asian and Latin American nations aimed at promoting increased economic interaction. The treaty is projected to add $120 billion to American exports over 10 years. A similar agreement with members of the European Union known as the Transatlantic Trade and Investment Partnership (TTIP) seeks to further enhance commercial intercourse with our largest trading partner by eliminating tariffs and harmonizing anti-competitive regulations.

Taken together, the TPP and the TTIP offer the potential to open foreign markets to more American products and create more good paying jobs here. And enacting a bill authorizing the president to conclude negotiations would demonstrate how Washington can work productively.

Another area of possible compromise is the funding of the federal transportation infrastructure. President Eisenhower established the Highway Trust Fund in 1956 to pay for surface transportation projects and improvements. The trust is financed through gas taxes imposed on motorists, but has failed to keep up with congressional appropriations for road construction and has therefore required numerous last-minute taxpayer bailouts to remain solvent.

The federal tax rate of 18.4 cents per gallon has remained unchanged since 1993, while per capital fuel consumption has declined due to increased mileage efficiency. The Senate passed a funding bill co-sponsored by Senators Corker (R-TN) and Murphy (D-CT) that raised gas taxes to correct the funding shortfall but failed to get House approval. A more successful vote is likely next session given Speaker Boehner's enhanced majority, and the President would almost certainly endorse the fix to the perennially dysfunctional transportation fund.

Perhaps the lowest fruit would be the repeal of a universally unpopular tax on medical devices like pacemakers, artificial hips, hospital beds and even rubber gloves. The tax, enacted as part of Obamacare, has been met with harrumphs from members on both sides of the aisle as a disincentive to investment and innovation and a job killer. At least 15 Democrats in the Senate have agreed to join Republicans in voiding the tax, and the President has given the nod to such a limited amendment to his namesake legislative accomplishment.

These modest but important bipartisan successes could serve to break through the hyper partisanship and set the stage for more difficult accords on taxes, deficit reduction and long-term entitlement reform. A journey of a thousand miles begins with a single bill passed by both houses and signed by the President.

Christopher A. Hopkins, CFA, is a vice president and portfolio manager at Barnett & Co. in Chattanooga.

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