Everything to watch for (and when) on primary day in IN, NC, OH, and WV

Today, voters in Indiana, North Carolina, Ohio, and West Virginia will go to the polls as primary season swings into high gear.

Republicans will choose Senate nominees to take on three vulnerable Democratic incumbents: Indiana’s Joe Donnelly, Ohio’s Sherrod Brown, and West Virginia’s Joe Manchin. Both sides also have competitive races to succeed termed-out Gov. John Kasich in Ohio, as well as plenty of House races to watch across these four states.

It only takes a simple plurality to win nomination in Indiana, Ohio, and West Virginia, while North Carolina requires a July runoff if no candidate takes more than 30 percent of the vote. However, since all of the primaries we’ll be watching have no more than three candidates running, all of these nominations will be settled on Tuesday, barring the most extraordinary of circumstances.

Things kick off at 6 PM ET when polls close in most of Indiana, with the small portion of the state in the Central time zone closing an hour later. Polls close in North Carolina, Ohio, and West Virginia at 7:30 PM ET.

INDIANA

● IN-Sen (D): Sen. Joe Donnelly is a vulnerable Democrat on everyone’s list, but it’s anyone’s guess who will face him in the fall. Republicans long expected a nasty duel between Rep. Luke Messer, who is close to the state party establishment, and Rep. Todd Rokita, a former secretary of state who has always been more of a lone wolf. But wealthy former state Rep. Mike Braun has scrambled things, and he’s used his fortune to outspend both congressmen and run ad after ad portraying himself as a political outsider. Polling has been scarce, so there’s no telling how this one will go.

All three Republicans attracted some bad press throughout the campaign and even into the final days. Rokita has been the most aggressive about portraying himself as the one true Trump ally in the race, so it didn’t look so good when Trump’s re-election campaign demanded that he stop using yard signs that seemed to suggest the White House was supporting Rokita’s bid. (After initially snarking, “We not not comment on yard sign strategy,” the Rokita campaign appeared to cover up the bogus endorsement with painter’s tape.)

Messer, meanwhile, has been on the defensive for months since news broke that he co-owns his Indiana residence with his mother while his family now lives in the D.C. area. (Similar charges that he’d “gone Washington” famously sank Sen. Richard Lugar in his 2012 primary.) Late in the race, the public also learned that in 2003, when Messer was persuading local Indiana GOP leaders to appoint him to replace a state representative who had been killed by a drunk driver, Messer had kept his own two DUIs a secret.

And finally, it turns out that Braun consistently voted in the Democratic primary until 2012, naturally leading his rivals to question his loyalty to the GOP. Braun has argued that he’s a successful businessman, but a recent Associated Press article painted him in a very different light, finding that his company has been charged with a litany of labor law violations and has sought the very sort of government subsidies that Braun has attacked on the campaign trail.

● IN-02 (D) (59-36 Trump, 56-42 Romney): While GOP Rep. Jackie Walorski decisively won re-election in 2014 and 2016, Democrats haven’t forgotten about her surprisingly tight 49-48 victory when she won her first term in 2012. The DCCC is hoping to target Walorski in the fall, and healthcare executive Mel Hall appears to be the frontrunner to take her on. Hall’s main primary foe is businessman Yatish Joshi, who has the support of Joe Kernan, a former mayor of South Bend and Indiana’s most recent Democratic governor. Hall outspent Joshi by a wide $233,000 to $59,000 from April 1-18, which the FEC calls the “pre-primary period.”

● IN-04 (R) (64-30 Trump, 61-37 Romney): Rep. Todd Rokita is leaving to run for the Senate, and the winner of the crowded GOP primary should have little trouble holding this seat, which includes Lafayette and some of Indianapolis’ western suburbs. The frontrunners appear to be Diego Morales, who served as a senior advisor to then-Gov. Mike Pence, and Steve Braun, who resigned as state Department of Workforce Development director to run here. (Yes you’ve read that name before in this piece, Braun is also a brother of Senate candidate Mike Braun, though the two haven’t campaigned together.) State Rep. Jim Baird, an Army veteran who lost his left arm in Vietnam, is also in the mix.

Morales has the support of some old Pence allies (the vice president has formally remained neutral), but he drew bad headlines in March when the Journal & Courier reported that he’d left several government jobs for poor performance and seemed to exaggerate his resume. Braun, who has done some considerable self-funding, outspent Baird $321,000 to $73,000 during the pre-primary period, while Morales spent $64,000.

A pro-Morales group called With Honor Fund has aired ads hitting Braun, while the pro-Braun Citizens for a Strong America has spent at least $300,000 attacking Morales and $18,000 against Baird. Morales, a Guatemalan immigrant, took umbrage with a CSA mailer encouraging voters to send him “back across town, where he actually lives!”, while another one charging that a gas tax Baird voted for cost Indiana a proverbial arm and a leg generated plenty of news coverage and condemnation.

● IN-06 (R) (68-27 Trump, 60-37 Romney): GOP Rep. Luke Messer is leaving his eastern Indiana seat to run for the Senate, and there’s one undisputed frontrunner in the primary to succeed him. Businessman Greg Pence, an older brother of Vice President Mike Pence and a close Messer ally, has benefited from his family’s name recognition and connections, and he’s mostly cleared the field. Pence has earned some negative attention both for staying largely out of sight on the campaign trail and for some serious business failures, but it’s unlikely to be enough to stop him. Pence’s most visible primary foe is self-funding businessman Jonathan Lamb, who has run some truly bizarre ads (They’re on youtube check’em out).

● IN-09 (D) (61-34 Trump, 57-41 Romney): Democrats hope that freshman Rep. Trey Hollingsworth’s very weak ties to the state and unimpressive fundraising will give them an opening in this southern Indiana seat. The two main Democrats competing to face him are Indiana University professor Liz Watson, who previously served as a senior Democratic staffer on the U.S. House’s Committee on Education and the Workforce, and civil rights attorney Dan Canon. EMILY’s List is backing Watson, who outspent Cannon $89,000 to $20,000 during the pre-primary period.

NORTH CAROLINA

● NC-02 (D): (53-44 Trump, 56-43 Romney): Democrats are planning to target GOP Rep. George Holding in this suburban Raleigh seat. Tech executive Ken Romley, who has been self-funding much of his campaign, outspent former state Rep. Linda Coleman $254,000 to $34,000 during the pre-primary period. But Coleman, who lost competitive general elections for lieutenant governor in 2012 and 2016, likely began the race with considerably more name-recognition than Romley. In addition, in primaries so far in Texas and Illinois, we’ve generally seen women candidates performing well this cycle; if this pattern continues, it could help Coleman offset Romley’s considerable spending edge. Army veteran Wendy May, who would be the first transgender member of Congress, is also in, but she hasn’t reported raising anything.

● NC-03 (R): 61-37 Trump, 58-41 Romney): Twelve-term Republican Rep. Walter Jones has spent years voting against the House leadership’s priorities, and now he’s turned hostile to Trump’s policies: This Congress alone, the self-described “thorn in people’s ass” voted against the House version of Trumpcare and the tax bill, arguing that both were fiscally irresponsible. Jones faces a primary challenge from Craven County Commissioner Scott Dacey, who is arguing that this coastal seat needs a more reliable Trump ally.

Dacey outspent Jones $120,000 to $39,000 during the pre-primary period, and a mystery group called the Conservative Leadership Alliance began airing ads against Jones last month. But Jones, who announced during the campaign that he wouldn’t seek another term in 2020, has won more than his fair share of competitive primaries. Marine veteran Phil Law, who lost to Jones 65-20 in 2016, is running again, and he could split the anti-incumbent vote. The only poll we’ve seen was a late March survey from the conservative think-tank Civitas and conducted by an arm of SurveyUSA that gave Jones a 37-28 lead over Dacey, with Law at 15.

● NC-09 (R) (54-43 Trump, 55-44 Romney): Last cycle, Rep. Robert Pittenger won a three-way GOP primary with pastor Mark Harris by just a 35.0-34.5 margin. Pittenger was running for a redrawn seat that largely new to him while also facing an FBI and IRS investigation related to his old real estate company over loans he made to his 2012 congressional campaign. Harris is seeking a rematch, but now that the investigation has ended without charges and redistricting won’t be the same factor, Pittenger looks like he’s in much better shape this time around in this suburban Charlotte seat.

A March poll from SurveyUSA for the conservative Civitas Institute found Pittenger ahead 52-20, with little-known candidate Clarence Goins at 7. Pittenger’s campaign later released its own poll giving him a 59-26 edge, while even Harris’ own survey found the incumbent up 38-30. Pittenger outspent Harris $117,000 to $64,000 during the pre-primary period, and he’s aired many ads arguing that Harris opposed Trump in 2016. Whoever wins will quickly need to prepare for an expensive general election with solar energy businessman Dan McCready, who faces only a weak opponent in the Democratic primary.

OHIO

● OH-Sen (R): Two wealthy Republicans are competing to take on Democratic Sen. Sherrod Brown, but Rep. Jim Renacci is the heavy favorite. Renacci picked up an endorsement from Donald Trump late in the race, while businessman Mike Gibbons never seemed to impress party leaders. What little polling there is has found that neither candidate is very well-known, but it would be a big surprise if Renacci loses to Gibbons, who doesn’t seem to have much of a base of support to draw from.

● OH-Gov (R & D): Republican incumbent and Trump critic John Kasich is termed out, and both parties have primaries to succeed him. On the GOP side, Attorney General Mike DeWine has the support of much of the party establishment over Lt. Gov. Mary Taylor, and he’s also outspent her. Taylor has attacked DeWine, who served 12 years in the U.S. Senate, as a member of that dreaded establishment. DeWine and his allies have spent heavily on the airwaves to hit Taylor, so they’re at least taking her seriously. But what little polling we’ve seen has shown DeWine consistently ahead by sizable margins, and it would be a huge upset if Taylor beat him.

The Democratic frontrunner is Richard Cordray, who narrowly lost re-election as attorney general to DeWine in 2010 and resigned in the fall as head of the federal Consumer Financial Protection Bureau to run for governor. His main opponent is former Rep. Dennis Kucinich, a longtime Cleveland politician and quixotic two-time presidential candidate. (Also a top ten member for one of your editors)

Cordray has the support of Massachusetts Sen. Elizabeth Warren (who first proposed the creation of the CFPB) and much of the state Democratic establishment, while Kucinich is relying on his old Cleveland base and several Bernie Sanders allies, though Sanders himself has remained neutral. State Sen. Joe Schiavoni never gained much traction, but he could do well in his Youngstown base; former state Supreme Court Justice Bill O’Neill is also running.

Cordray has a huge financial edge over Kucinich, but the former congressman got some last-minute help when a super PAC run by a Republican donor friendly with Kucinich ran a flight of ads hitting Cordray from the left. Still, a Kucinich win would be an upset, though it’s something we can’t rule out. Kucinich touted his longtime support for Medicare for all and has hit Cordray for his past A-ratings from the NRA, and even Cordray’s allies concede he’s not an exciting speaker.

Polling has been light here, but the last couple of surveys have given Cordray double-digit leads, albeit with large numbers of undecideds.

● OH-12 (R & D) (53-42 Trump, 54-44 Romney): GOP Rep. Pat Tiberi resigned to take a job leading an industry lobbying group, and that’s created a bit of an odd situation in this suburban Columbus seat. There will be an Aug. 7 special election to complete the final months of Tiberi’s term, but the primary for both the special election and the regular two-year term will take place simultaneously on Tuesday. As a consequence, there’s always a small chance that someone could win their party’s nomination for just one of the two contests.

The crowded GOP primary has turned into a classic establishment vs. insurgent battle. Defending Main Street, a super PAC set up to stop anti-establishment candidates from winning GOP primaries, has spent at least $400,000 on ads for state Sen. Troy Balderson. And Tiberi’s used the remaining funds in his campaign account to air ads staring the former congressman praising Balderson.

On the other side, the House Freedom Caucus’ allied House Freedom Action group has been spending for Liberty Township Trustee Melanie Leneghan. The anti-tax Club for Growth hasn’t formally taken sides, but they’ve been airing ads hitting Balderson and have said they’d be happy with Leneghan.

The only poll we’ve seen was a mid-April Balderson poll that showed him leading Leneghan 17-11, with economist Tim Kane and state Sen. Kevin Bacon at 10, while Delaware County Prosecutor Carol O’Brien was at 7; Bacon and O’Brien seem more establishment-oriented, while the Club for Growth also said it was comfortable with Kane. In a familiar storyline, GOP insiders privately fretted to the media a few weeks ago that Leneghan is a weak candidate who could cost them this seat in the August special.

On the Democratic side, local leaders have consolidated behind Franklin County Recorder Danny O’Connor. His main primary foe is former Franklin County Sheriff Zach Scott, who badly lost a 2015 race for mayor of Columbus to Andrew Ginther (who is supporting O’Connor) and narrowly lost renomination the next year against a candidate backed by Ginther and his allies. O’Connor only outspent Scott $36,000 to $20,000 during the pre-primary period, but he had a $121,000 to $18,000 cash-on-hand edge on April 18. Farmer John Russell, who lost a 2016 race for the state House, is also in.

● OH-16 (R) (56-39 Trump, 53-45 Romney): The GOP primary to succeed Senate candidate Jim Renacci in this very gerrymandered seat, which includes parts of the Akron, Canton, and Cleveland areas, pits the old party establishment against a more Trumpesque candidate. On the one side is Anthony Gonzalez, who was a football star at the Ohio State University and later went on to play for the Indianapolis Colts. Gonzalez has the backing of influential donors and local political figures, while the U.S. Chamber of Commerce launched a $300,000 buy for him in the final week of the campaign.

His opponent is state Rep. Christina Hagan, who was a prominent Trump backer in 2016 when Ohio Gov. John Kasich was also seeking the GOP presidential nomination. Hagan has an endorsement from the NRA as well as from two of the most prominent people to be fired from the Trump administration: Anthony Scaramucci and Sebastian Gorka. Hagan has pitched herself as a Trump ally and argued that Gonzalez, who worked in Silicon Valley before he came home to run for office, is an insider. Gonzalez outspent Hagan by a wide $272,000 to $74,000 during the pre-primary period, and most of the outside spending has been for him.

WEST VIRGINIA

● WV-Sen (R): Democratic Sen. Joe Manchin is one of the GOP’s top targets in the Senate this year, and three noteworthy Republicans are competing to face him. The party establishment hasn’t shown much of a preference between Rep. Evan Jenkins or Attorney General Patrick Morrisey, but they’ve made it very clear they view former Massey Energy CEO Don Blankenship as dangerously unelectable, and they’ve spent heavily to stop him. One day before the primary, Trump even tweeted that voters should support Jenkins or Morrisey but not Blankenship.

It’s not hard to see why so many Republicans fear that Blankenship would be a toxic nominee. After a 2010 explosion at Massey’s Upper Big Branch mine resulted in the deaths of 29 of Blankenship’s employees, he spent a year in prison for conspiring to violate federal mine safety laws. While most people with such a record would gladly slink off into obscurity, not Blankenship: He declared himself a political prisoner of the Obama administration, spending millions of his own money on ads making that argument (with racist flourishes), as well as attacks on Manchin, Morrisey, and Jenkins. It’s a message that could indeed work in a state like West Virginia.

The good news for Blankenship enemies like Senate Majority Leader Mitch McConnell (whom Blankenship infamously dubbed “Cocaine Mitch” in a campaign ad) is that recent public polls show him firmly in third place, while Jenkins and Morrisey are locked in a tight race. However, they’re still acting worried, and private GOP polls reportedly showed Blankenship taking a small lead in the final days of the race.

And indeed, Jenkins and Morrisey have mostly been attacking one another, though Morrisey belatedly started going after Blankenship in the final weekend of the campaign. Jenkins has hit Morrisey’s past work as a lobbyist, while Morrisey has gone after Jenkins for being a Democrat until he ran for Congress in 2013. Morrisey has also benefited from some outside spending from a super PAC funded by conservative mega donor Richard Uihlein. National Democrats, meanwhile, have also spent big to influence the race. While it originally looked like they were attacking both Jenkins and Morrisey equally in order to help Blankenship, Team Blue has spent almost all of its money against Jenkins while mostly leaving Morrisey alone.

● WV-02 (D) (66-29 Trump, 60-38 Romney): This central West Virginia seat is very much a longshot Democratic target, but Team Blue hopes that Rep. Alex Mooney, who, believe it or not, was a member of the Maryland legislature before joining the Mountain State’s congressional delegation in 2014, could be vulnerable in a good year. Army veteran Aaron Scheinberg is facing off with former U.S. State Department official Talley Sergent in the Democratic primary. Scheinberg outspent Sergent $92,000 to $65,000 during the pre-primary period, and he had considerably more money left over. However, Scheinberg only moved to West Virginia from New York in 2017, and while he touts his family’s roots in the state, he could negate Team Blue’s best line of attack against the carpetbagging Mooney.

● WV-03 (R) (73-23 Trump, 65-33 Romney): Evan Jenkins’ 2014 win over Democratic incumbent Nick Rahall made him the first Republican to represent southern West Virginia in generations, and there’s a crowded GOP field to succeed the Senate candidate. There’s no obvious frontrunner, and major outside groups also haven’t taken sides here.

Del. Carol Miller outspent fellow Del. Rupie Phillips, a longtime Democrat who only became a Republican last year, $179,000 to $135,000 during the pre-primary period, while former state party chair Conrad Lucus deployed $135,000. Del. Marty Gearheart and former Del. Rick Snuffer, who lost to Rahall in 2004 and 2012, are also in, but they’ve spent little between them. Team Blue is hoping that this seat’s old Democratic heritage could give them an opening, and a few candidates are competing for the nod. However, only state Sen. Richard Ojeda, an Iraq veteran who was brutally beaten at a campaign event in 2016, has spent much money, and he’s also attracted a good deal of national attention

In optimistic State of the Union, Trump pitches deals to Dems

President Donald Trump on Tuesday delivered his first State of the Union address, using the occasion to make a sober appeal to unity and challenged his Democratic antagonists to cooperate in overhauling the nation’s immigration system and rebuilding its dated infrastructure.

The hour and twenty-minute-long speech pointedly lacked the partisan barbs that have become to define Mr. Trump’s presidency. Instead, Trump-the-optimistic-deal-maker was on display Tuesday, inviting bipartisan cooperation on his new year’s agenda of rebuilding the nation both economically and culturally.

“Tonight, I call upon all of us to set aside our differences, to seek common ground and to summon the unity we need to delivery for the people,” he said.

Beyond the pomp and showmanship, here’s what the speech means:

  • The president wants an immigration deal, with caveats. Trump has said both publically and privately he wants to protect undocumented immigrants who were brought to the United States as children, popularly known as Dreamers, but he appropriated the movement’s language for his own purposes in last night’s speech. “My duty,” he said, “and the sacred duty of every elected official in this chamber, is to defend Americans–to protect their safety, their families, their communities, and their right to the American Dream. Because Americans are dreamers, too.” He offered what he called a compromise: trading a pathway to citizenship for some 1.8 million Dreamers in exchange for border wall funding along the US-Mexico border, new caps on family-based migration, and a shuttering of the diversity visa lottery program. While he extended “an open hand to work with members of both parties,” glimmers of the old Trump was still on display. Seated in First Lady Melania Trump’s viewing box, Trump pointed to four parents grieving the loss of children who were murdered by members of the MS-13 gang.
  • The president wants to build things again, but doesn’t know what, where, or how. “America is a nation of builders. We built the Empire State Building in just 1 year,” Trump said. “Isn’t it a disgrace that it can now take 10 years just to get a minor permit approved for the building of a simple road?” The president talked up his plan for infrastructure reform in broad terms, saying he would marry federal, state, and local government revenue to cobble together a $1.5 trillion package but didn’t say how the money would be spent or where.
  • The president wants to police reciprocal trade and IP. Mr. Trump, who often rails against the North American Free Trade Agreement and the 12-nation Trans-Pacific Partnership as markers of bad trade negotiations, said he would work in the new year to “fix bad trade deals and negotiation new ones.” Enforcement actions will remain a chief concern of the administration in the new year, and the president directly pledged to protect American intellectual property–widely regarded as a shot across the bow of China, who the president regularly chides for trade and IP abuses.
  • Gitmo is staying open. The White House released during the president’s speech a new executive order keep open the controversial military detention facility at Guantanamo Bay. The order, which reverses parts of a 2009 directive signed by President Barack Obama, allows for the possibility of new enemy combatants being sent to the prison “when lawful and necessary.”
  • The president has his eye on “Little Rocket Man.” President Trump was more measured when he discussed North Korea, avoiding the Twitter taunts and big button braggadocio, and instead spoke about the brutality of the “depraved” regime who’s “reckless pursuit of nuclear missiles could very soon threaten our homeland.” Ever the showman, Mr. Trump invited a North Korean defector to attend, receiving a standing ovation as he held over his head the crutches he needed to walk after enduring brutal torture. He also singled out the case of Otto Warmbier, a student at the University of Virginia who was traveling in North Korea while arrested and charged with crimes against the state. Brutally injured while detained, he was released recently to the United States and died shortly thereafter.

 

Government Shut Down Update

“A partial shutdown starting Saturday would in some ways not resemble the one in 2013. They could have made the shutdown in 2013 much less impactful, but they chose to make it worse. The only conclusion I can draw is they did so for political purposes. So it will look different this time around.”  – Mick Mulvaney, Director, OMB, 1/19/18

 

What would be the effects of a government shutdown?

Federal workers

Agencies are required to submit plans to the OMB outlining anticipated staffing levels during a shutdown.

Estimated furloughs range from 99.3 percent of those at the NLRB to 3.8 percent of those at GSA. Workers deemed “exempt” for protection of property and people are considered exempted from furlough.

Government contractors

Government contractors would not be paid during a shutdown.

Federal grant recipients

Administering federal grants could be affected by a shutdown.

Social Security and other government benefits

Recipients of Social Security, SSI, unemployment insurance, TANF, food stamps and some other programs would continue to receive benefits. The programs’ spending is not dependent on Congress’ explicit funding. However, some processes related to applying for or appealing a denial or reduction of these benefits might be stopped.

Medicare and Medicaid

In the last shutdown, some physician payments were slightly delayed, but the programs continued running.

Veterans hospitals

Congress has already explicitly funded VA hospitals, so they would not be affected by a shutdown.

Local parks, schools, libraries and government buildings

Since these entities are controlled locally and not by the federal government, they would not be affected by a shutdown.

Federal courts

The courts have at least three more weeks of funding after a government shutdown.

Congress

Congress would continue to work, though some low-level staff may not get paid.

Most federal office buildings

Most departments and agencies would be shut down, and their employees sent home.

NAFTA Negotiations

While the US Embassy and Montreal consulate remain open, it is unclear whether all the personnel from the various agencies that form the working groups would be cleared to travel and work.

National parks and monuments

OMB Director Mick Mulvaney declared at Friday’s White House news briefing that the parks would stay open during a shutdown.

Smithsonian museums and the National Zoo

The museums and the zoo have funding to stay open through Sunday but would close on Monday. However, we assume the animals would still be fed.

US Postal Service

The US Postal Service is an independent agency, so it would not be affected by a government shutdown.

Passport offices

Some passport offices would likely remain open. However, those located inside federal buildings would close.

Airports

Air traffic controllers, TSA officers and customs agents would continue to work at airports.

Special Counsel Mueller’s Russia investigation

The probe’s funding is approved by Congress outside of the normal government funding process, so it would not be affected by the shutdown.

Military operations

Active duty troops would continue to work, though some training exercises would cease.

IRS customer service

Automated processes would continue, but all processes that require people, such as customer service, would close.

Federal financial aid

Though 90 percent of Education Department staff would be sent home, people assigned to federal financial aid would continue working.

Food inspection

USDA inspection of meat, poultry and eggs would continue.

US Senate Commerce Committee Marks up and Passes Autonomous Vehicles Bill

The US Senate Committee on Commerce Science and Transportation (the Committee) today marked up and passed bipartisan legislation, S.1885, the AV START Act, proposed by Senators John Thune (R-SD) and Gary Peters (D-MI). The bill now moves forward for a vote by the full Senate and will then need to be reconciled with similar legislation that passed the House in early September.

Key provisions of the bill include:

Clarifying federal, state and local roles: Mirroring the legislative provisions in the SELF-DRIVE Act (H.R. 3388), which passed the House in early September, the bill codifies the Department of Transportation’s (DOT’s) lead national role for AV safety standards and performance while supporting state and local roles in determining traffic laws, registration and licensing. This approach avoids a patchwork of state and local safety standards that could stunt sector innovation.

Protecting Americans with disabilities: The bill expressly prohibits the denial of a license to operate a self-driving vehicle on the basis of a disability. Corresponding best practices are outlined for drivers with disabilities as this technology emerges. Ahead of the hearing the American Association for People with Disabilities, the National Federation of the Blind, the National Council on Disability and a coalition of other similar interests all endorsed the legislation.

Safety reports: The bill requires vehicle manufacturers to submit, prior to the testing or deployment, safety evaluation reports to the Secretary of Transportation (the Secretary) on safety, crashworthiness and cybersecurity based on testing, validation and assessment protocols.

Safety standards: The bill expands the Secretary’s existing discretionary authority to allow for a streamlined process for federal motor vehicle safety standards to prioritize safety for up to 80,000 vehicles per manufacturer three years after enactment after an amendment from Senator Richard Blumenthal (D-CT) that lowered the exemption from 100,000.

Maintains status quo for trucks and buses: Despite some proposals to have the legislation apply to trucks and buses, the Act applies only to vehicles weighing 10,000 pounds or less.

Cybersecurity: The Secretary is directed to convene and partner with AV manufacturers to develop and implement policies related to mitigate the risks of potential cybersecurity breaches. In addition, the bill mandates manufacturers to establish comprehensive plans for identifying and mitigating cybersecurity risks to self-driving vehicles.

The bill also establishes a DOT-led committee of experts to propose standards, including for data recording and data access and sharing. This public-private stakeholder forum will have a broad mandate to develop other recommendations for other policy issues related to self-driving vehicles over time.

Consumer protection: The bill also calls for the establishment of guidelines on “responsible consumer education and marketing.” These guidelines will educate consumers on the capabilities and limitations of this new technology and will be developed through a transparent, formal working group.

During the markup, Senator James Inhofe (R-OK) offered, and then withdrew, an amendment that would have included heavy trucks in the Act’s definition of a highly automated vehicle and would have given the National Highway Traffic Safety Administration (NHTSA) authority to regulate heavy trucks under the Act. Inhofe withdrew the amendment in response to opposition from several senators concerned about how automation would affect employment within the trucking industry. Committee Chairman John Thune (R-SD) committed to work with Inhofe on the trucking issue.

The Committee also adopted a number of non-controversial amendments by voice-vote. One of the more notable amendments, offered by Senator Tammy Duckworth (D-IL), would require the DOT to conduct a study on the transportation, mobility, environmental, energy security, and fuel economy impacts of highly automated vehicles on public roads.  Several amendments dealt with cybersecurity. For instance, the Committee approved an Inhofe amendment that would establish an advisory committee to provide recommendations to Congress on cybersecurity issues in relation to highly automated vehicles.  Another amendment, offered by Senator Roger Wicker (R-MI), would direct the DOT to develop additional cybersecurity resources to assist consumers in minimizing motor vehicle cybersecurity risks.

Promises made, questions left unanswered by GOP tax plan

The Trump administration and Congressional Republican leaderships this week released their “Unified Framework for Fixing our Broken Tax Cod,” a nine-page manifesto birthed from months of closed-door meetings on tax reform by the so-called Big Six: Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady, and Senate Finance Committee Chairman Orrin Hatch.

The goal of the framework is to move the tax reform process forward, in particular to build support for a budget resolution that will permit the House and Senate to pass tax reform legislation by a simple majority vote.

With that goal in mind, the framework answers several important questions regarding tax reform, but it leaves far more either unanswered or with too brief or too vague of a description to evaluate.  Because it is an advocacy piece, the framework is light on details.  And, when it has details, they generally focus on the good news (i.e., taxpayer-favorable provisions that are being added or expanded) rather than the bad news (i.e., provisions being eliminated or reduced).   Further, in many cases, the framework uses guarded language or caveats when discussing politically sensitive areas.  For example, the framework “aims” to consolidate the tax rates for individuals, “envisions” changing inflation adjustments and repealing provisions to make the tax code simpler, and “contemplates” preventing wealthy individuals from avoiding the top personal tax rate.  Areas that are still unsettled or where further work is required are left to the Ways and Means Committee and Finance Committee (the “committees”) to work through and resolve.

What the Framework Says

Rates

Individuals

The framework “aims” to consolidate the current seven tax brackets into three brackets of 12%, 25% and 35%, although it warns ominously that “an additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers.” The framework also calls for use of a more accurate (i.e., less taxpayer-favorable) measure of inflation for purposes of indexing the tax brackets and other tax parameters.

Businesses

For corporations, the framework would reduce the top tax rate to 20%. It notes that “the committees also may consider methods to reduce the double taxation of corporate earnings,” leaving open the possibility of a corporate integration proposal.

For pass-through entities, the framework would “limit the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%.” Nonetheless, the framework “contemplates that the committees will adopt measures to prevent the recharacterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate. ”

Deductions, Exclusions and Exemptions

Individuals

The framework would:

  • combine the existing standard deduction and the personal exemptions for taxpayer and spouse and increase it to $24,000 for married taxpayers filing jointly and $12,000 for single filers;
  • convert existing personal exemptions for dependents into an enhanced child tax credit or a non-refundable $500 credit for non-child dependents;
  • eliminate “most” itemized deductions, but “retain tax incentives for home mortgage interest and charitable contributions, and
  • retain “tax benefits that encourage work, higher education and retirement security,” although the committees are encouraged to simplify them “to improve their efficiency and effectiveness.”

Punted to the committees:

  • “work on additional measures to meaningfully reduce the tax burden on the middle-class;”
  • repeal of many of the “numerous” exemptions, deductions and credits for individuals that “riddle the tax code” in order to “make the system simpler and fairer;” and
  • the appropriate treatment of interest paid by non-corporate taxpayers.

Businesses

The framework:

  • would provide immediate expensing, for at least a five-year period, for all depreciable assets– other than structures–acquired after September 27, 2017.
  • states that the deduction for net interest expense incurred by C corporations will be partially limited.
  • specifically calls for the repeal of the section 199 manufacturing deduction, and states that “numerous other special exclusions and deductions will be repealed or restricted.” There are two explicit exceptions–the R&D tax credit and the low-income housing tax credit–although “the committees may decide to retain some other business credits to the extent budgetary limitations allow.”
  • would “modernize” the tax rules affecting specific industries “to ensure that the tax code better reflects economic reality and that such rules provide little opportunity for tax avoidance.”

Repealed

The framework would repeal:

  • The individual alternative minimum tax (“AMT”);
  • the corporate AMT (or at least “aim to”); and
  • the estate tax and generation-skipping transfer tax.

International Tax Reform

The framework:

  • Calls for adoption of a new “territorial” tax system with a 100% exemption for dividends from foreign companies in which the US parent owns 10% or more of the shares. However, this dividend exemption comes at price: “to prevent companies from shifting profits to tax havens, the framework includes rules to protect the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations.”
  • Would impose a “deemed repatriation” tax on US multinationals with offshore earnings. Different rates would apply to earnings held in liquid and illiquid form, although neither the rates nor the period over which the payments must be made is specified.
  • States that the committees will incorporate rules to level the playing field between U.S.-headquartered parent companies and foreign-headquartered parent companies.

What the Framework Doesn’t Address

  • Effective dates (other than for expensing)
  • Phase-ins and transition rules
  • How the international tax rules would apply to individuals
  • How it plans to comply with the budget rules

Next Steps

The House and Senate have to agree on a budget resolution that provides for a tax reform package in line with the framework. Once that is agreed to, the Ways and Means Committee and Finance Committee can proceed to marking up tax reform legislation and filling in the blanks.

Congress and executive branch continue momentum toward bipartisan federal policies on autonomous vehicles

A week after the House of Representatives passed sweeping autonomous vehicle (AV) legislation, the Senate and the Trump administration both moved forward on AV policy initiatives this week, with Department of Transportation Secretary Elaine Chao releasing policy guidance, which is now out for public comment, and the Senate releasing a discussion draft of legislation and holding hearings on potential impacts to the trucking sector.

DOT’s Chao releases NHTSA policy guidance

On Tuesday at the University of Michigan, US Secretary of Transportation Elaine Chao announced the DOT and the National Highway Traffic Safety Administration’s (NHTSA) release of “Automated Driving Systems 2.0: A Vision for Safety.” Automated Driving Systems 2.0 provides guidance to industry and state regulators on managing this fast-evolving technology, fostering innovation and moving toward a holistic national approach to regulation and safety. The voluntary policy guidance, which replaces a previous voluntary guidance for the deployment and testing of self-driving cars issued by the Obama Administration, asserts that the second version provides “a more flexible approach to advancing the innovation of automated vehicle safety technologies.” The guidance encourages the development of best practices and making safety a priority. The document also provides technical assistance to states and examples of best practices for policymakers. It does not suggest new federal regulation at this time, explaining that the technology is new and rapidly evolving. The new guidance was published in the Federal Register on September 12 and the NHTSA has already commenced a 60-day public comment process.

The key change from the previous guidance involves the safety assessment for AVs that companies want to test and deploy. The 2016 guidance, “Federal Automated Vehicles Policy,” included a 15-point safety assessment process and allowed manufacturers to voluntarily submit their assessments of their vehicles and systems to the NHTSA, which would review and then publish them. The process was sparsely followed due to its voluntary nature. Under Automated Driving Systems 2.0, the safety assessment is scaled back to a 12-point process, manufacturers are no longer expected to submit them to the NHTSA for federal approval. In addition, Automated Driving Systems 2.0 guidelines are strictly focused on levels 3, 4 and 5 vehicles, in all of which the driver need not remain attentive during the system’s operation.

The 2016 Obama guidance provided a model state policy on regulations for AVs. the Trump guidance moves away from this approach, providing instead a set of best practices for both state legislatures and highway safety officials that begins to more clearly define state and federal regulatory roles. Mirroring bipartisan legislation emerging in Congress, the new guidance clarifies a preferred, nationally uniform approach where the federal government defines safety standards and requirements and states and localities focus on traditional licensing and registration matters, with a view to avoiding a patchwork of uncertain regulatory approaches that could stifle sector growth.

The NHTSA states that the 60-day public comment process demonstrates its intention to “continually revise and refine the guidance to reflect continued by public input, experience, research and innovation.”

Senate CST Committee releases discussion draft of legislation

The Senate Commerce, Science and Transportation Committee has made progress on its work on AV legislation. The committee recently released its staff discussion draft days after the House passed its own AV legislation with strong bipartisan support.

The Senate draft mirrors the House bill, though it also differs from the lower chamber’s measure in some key respects. Like the House bill, the Senate draft would direct the Transportation secretary to establish a “Highly Automated Vehicles Technical Safety Committee,” which would provide the Transportation secretary recommendations on consensus-based performance standards and the harmonization of national AV safety standards with international standards. The House bill provides the advisory committee with a broader mandate that includes not just safety standards but also protection of mobility access for the disabled and elderly.

The Senate draft would also allow AVs to receive exemptions from NHTSA safety standards under certain circumstances, such as if an exemption would make it easier for the development or field evaluation of a new motor vehicle safety feature. Under the Senate draft, up to 50,000 AVs could qualify for this exemption in the first 12-month period after the bill is enacted. The House bill, on the other hand, would limit exemptions to 25,000 AVs in that first 12-month period.

The Senate draft also requires that each manufacturer submit to the Transportation Secretary a safety evaluation report for each new AV or AV driving system that it introduces into interstate commerce. The safety evaluation report shall include a description of how the manufacturer is addressing key issues related to AVs, including system safety, data recording, cybersecurity, human-machine interface and crashworthiness, among other issues.

The Senate draft notes that a number of key issues remain unresolved among CST Committee members, including state preemption and whether the measure should address autonomous trucks.

Senate hearing on autonomous trucking

Autonomous trucks was the subject of a September 13 CST Committee hearing featuring testimony from a diverse group of stakeholders. The hearing underscored a divide between labor and industry interests on whether autonomous passenger vehicles and autonomous trucks should both be included in this bill and regulated on the same track. Witnesses including American Trucking Associations President and CEO Chris Spear, Navistar President and CEO Troy Clarke and National Safety Council President and CEO Deborah Hersman, who argued that automated trucks should be part of the bill since regulations could then address both automated trucks and passenger cars, which would provide regulatory certainty and clarity, which is important for the sector’s development.

Ken Hall, General Secretary Treasurer of the International Brotherhood of Teamsters, disagreed, testifying that “the issues facing autonomous commercial trucks are fundamentally different, and potentially more calamitous than those facing passenger cars, and warrant their own careful consideration.” Hall urged lawmakers against “taking a cookie cutter approach” in addressing risks related to automated trucks.

Accordingly, it remains to be seen whether trucking issues will be folded into currently moving legislation or remain on a separate course and timetable.

Senator Gary Peters (D-MI), who has been engaged in discussions with Committee Chairman John Thune (R-SD) on the draft bill, stated that he does not believe automated trucks should be included in this measure due to issues related to safety and potential driver displacement. During the hearing, Peters and other Democrats on the Committee raised concerns about autonomous trucks having a negative impact on truck driver jobs. Spears contended that the technology would assist, not displace, truckers. Notably, the House bill was limited to automated passenger vehicles and did not address automated trucks.

Speaking for the Committee, Senator Thune expressed a commitment to introducing and passing bipartisan AV legislation, but he gave no timetable and the Committee will likely first have to address the divide on whether trucks should be part of the measure.

As Congress returns: Tax reform

Although the Trump administration and the Republican leaders in Congress desperately want to pivot to tax reform, the volume of actual “must do” legislation that must be considered in September will inevitably siphon time and attention from tax reform efforts.

Further, despite an August communications offensive on the tax reform issue, neither Congress nor the Administration have provided details fleshing out the principles and concepts on which they supposedly agree. Given that the countdown clock for enacting tax legislation before the 2018 election season begins in earnest is already ticking, if Congress and the administration want to enact tax legislation with only Republican votes, they will be increasingly pulled in the direction of tax cuts and temporary provisions rather than comprehensive tax reform and permanent changes.