NAILBA Perspectives Perspectives Fall 2018 | Page 15

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