THE SOURCE - Summer 2017 - 24

a replacement plan. Adding even more
difficulty to the task for Republicans is
the fact that individual provisions of ACA
are widely popular with people and some
Republican politicians. For example, ACA's
prohibition against denying healthcare
coverage to people with pre-existing
conditions is very popular, but repealing
the current system, which outlaws
that, presents significant challenges for
Republicans who can't use the individual
mandate and other provisions in ACA
that make such a ban practicable for
health insurance companies. Similarly, the
expansion of Medicaid provided under
ACA has proved popular among some
Republicans including Senate Energy and
Natural Resources Committee Chairman
Murkowski (R-Alaska), who said publicly
that she would be unable to support any
legislation that takes away the Medicaid
expansion, while very conservative House
members of the Freedom Caucus argue
that any plan that doesn't get rid of the
expansion will never get their vote.
Another major policy/political
problem, is that of this writing, the
replacement bill has not yet been released
or scored by the Congressional Budget
Office, which determines the cost of the
legislation and would project the number
of Americans covered by any such plan. In
early February, a draft outline from House
Republicans was released that focused
on providing tax credits to consumers to
help them afford insurance based upon
their age as opposed to Obamacare which
based the credits on income, provides
health savings accounts, gets rid of the
individual mandate, and provides $100
billion in funding for states every year
for 10 years to help their citizens get
coverage. The problem is that at this
point, it remains a draft document and the
pressure is on for Republicans to produce.
One final complicating factor for
Republicans is that they can immediately
repeal ACA through the reconciliation
process, which limits debate to 20 hours
total and most importantly, allows the
Senate to pass legislation with only
51 votes, and disallows votes on nongermane amendments. The issue is
reconciliation can only be used when a
budget has passed and none have this
Congress, and the reconciliation can only

be used on issues that affect spending,
revenues, or the debt limit. This means
that all of the ACA policies affecting
spending and revenue can be repealed
and replaced with Republicans' preferred
alternatives, but all of the other healthcare
policies to make the system work cannot.
So, Republicans would have to repeal ACA
and then pass legislation in the House
with 60 votes in the Senate, meaning that
eight Democrats would have to help,
which seems unlikely. Republicans could
do away with the filibuster rule requiring
60 votes entirely, but that would mean
if they ever lose control of the Senate in
the future, Democrats could pass bills
at will as well. Given these and many
other complicating factors, expect that
healthcare reform will continue to take
a substantial amount of time and effort
throughout the 115th Congress.
Another massive piece of complicated
legislation that continues to be worked
on in Congress is tax reform. For years,
Republicans and Democrats have argued
that the tax code is no longer competitive
with high statutory tax rates of 35 percent
on corporations and the highest tax rate
on citizens being 39.6 percent. However,
neither corporations nor individuals
necessarily pay the maximum tax rate
due to deductions and credits, meaning
that for both companies and people, the
effective tax rate is often much lower.
President Trump and the new
Republican Congress have made tax
reform a top priority and it is likely to be
considered after healthcare reform is
finished. The Republican proposal from
Speaker of the House Ryan (R-Wisc.) thus
far has focused on corporate tax reform
and it would: drop the top rate from 35
percent to 20 percent; allow immediate
expensing of all new capital investments;
prohibit the deduction of interest
payments on loans; ban the deduction
of imports that companies purchase;
reduce the likelihood of U.S. companies
avoiding taxes by slashing profits in
foreign countries; and, allow companies
to completely remove the revenue of
exports from their taxable income. The
last two pieces focusing on the ban on
deductions of imports and the removal
of taxes on exports is known as a border
adjustment tax (BAT). The BAT basically


favors exporters and penalizes importers.
Not only would BAT significantly favor
exporters, but it also has two critical
1. The BAT would raise almost $1 trillion
in new revenue to help pay for tax
reform; and,
2. It would hit importers of clothing,
machines, automobiles, oil, natural
gas, etc., with what is effectively a tax,
likely increasing their costs.
However, the proponents of the plan
argue that the second point may not
be an issue at all as currency markets
would adjust. As more and more exports
leave the U.S., foreign countries would
purchase U.S. dollars on currency markets
to buy U.S. goods, thereby driving up the
value of the U.S. currency. While foreign
consumers would be buying U.S. goods,
the countervailing decrease in demand
for imports of foreign goods would
reduce the number of dollars received
by foreigners from their imports, thereby
reducing the overall supply of dollars and
increasing the dollar's value. Economists
and trade experts who support the BAT
argue that currency markets would adjust
the value of the dollar such that average
consumers and companies would
be better off than under the current
system. However, opponents argue
that the currency adjustment is entirely
theoretical and may not perfectly align,
meaning that companies or individual
consumers could be worse off than under
the current system.
Already large retailers such as Target,
Walmart, and other entities such as Koch
Industries have mobilized against the BAT,
while exporters have mobilized in favor of
it. Complicating things further is the fact
that the $1 trillion of revenue provided by
the BAT is viewed as essential to pay for
tax reform, no other current, politically
acceptable option seems to exist. This is
merely the beginning of tax reform and
it should be expected that reform, if it
happens at all, will take a long time.
The last big ticket item that Congress
is working on is replacing Justice Antonin
Scalia, who passed away last year
during President Obama's term. Senate
Republicans refused to hold a hearing
or even consider President Obama's
replacement Judge Merrick Garland,


Table of Contents for the Digital Edition of THE SOURCE - Summer 2017

First Person
APGA Events
Q&A: Representative Walden
A Conversation with an APGA Member
Look Out Your Window
Winning Insight into Gas Losses
Electrify, Electrify
Furnace Rule Update
Legislative Outlook
The Pipeline
Marketing Matters
At Last
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THE SOURCE - Summer 2017 - 5
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THE SOURCE - Summer 2017 - 7
THE SOURCE - Summer 2017 - 8
THE SOURCE - Summer 2017 - First Person
THE SOURCE - Summer 2017 - APGA Events
THE SOURCE - Summer 2017 - 11
THE SOURCE - Summer 2017 - Q&A: Representative Walden
THE SOURCE - Summer 2017 - A Conversation with an APGA Member
THE SOURCE - Summer 2017 - 14
THE SOURCE - Summer 2017 - 15
THE SOURCE - Summer 2017 - Look Out Your Window
THE SOURCE - Summer 2017 - 17
THE SOURCE - Summer 2017 - Winning Insight into Gas Losses
THE SOURCE - Summer 2017 - 19
THE SOURCE - Summer 2017 - Electrify, Electrify
THE SOURCE - Summer 2017 - 21
THE SOURCE - Summer 2017 - Furnace Rule Update
THE SOURCE - Summer 2017 - Legislative Outlook
THE SOURCE - Summer 2017 - 24
THE SOURCE - Summer 2017 - 25
THE SOURCE - Summer 2017 - The Pipeline
THE SOURCE - Summer 2017 - Marketing Matters
THE SOURCE - Summer 2017 - 28
THE SOURCE - Summer 2017 - At Last
THE SOURCE - Summer 2017 - 30
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THE SOURCE - Summer 2017 - outsert1
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THE SOURCE - Summer 2017 - outsert3
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