EDITION 16

WeeklyNOvEmbEr 9, 2012

ElectionEdition

Congressional Investigations | Consumer Financial Protection Bureau | FDA | Healthcare Homeland Security | Labor & Employment | Media | Tax Policy | Regulatory Landscape | USDA

How THE ELECTIon IMPACTS PUBLIC PoLICy GoALS

03 Contents04 CongrEssional invEstigations

with Mark Paoletta

CovEr imagE: The United States Capitol is the meeting place of the United States Congress, the legislature of the federal government of the United States. Located in Washington, D.C., it sits atop Capitol Hill at the eastern end of the National Mall. Though it has never been the geographic center of the federal district, the Capitol is the origin by which both the quadrants of the District are divided and the city was planned. Officially, both the east and west sides of the Capitol are referred to as “fronts”. Historically, however, only the east front of the building was intended for the arrival of visitors and dignitaries. Like the federal buildings for the executive and judicial branches, it is built in the distinctive neoclassical style and has a white exterior.

This edition of LEVICK weekly looks at the impact of the 2012 vote and what business can expect to happen—or not happen—on multiple fronts. our Election Edition features interviews with ten of the top government relations experts in the country in which they discuss what’s next in general areas from regulatory to tax policy, as well as specific prognoses on healthcare, homeland security, and the lessons businesses can learn from how the campaigns leveraged social media.

08 ConsumEr FinanCial ProtECtion BurEau with Jonathan Pompan

12 FDa with Joseph A. Levitt

14 HEaltHCarE with Laura Bozell

18 HomElanD sECurity with Michelle Mrdeza

22 laBor & EmPloymEnt with Maurice Baskin

26 mEDia with Peter Fenn

30 rEgulatory lanDsCaPE with Andrew Zausner

34 tax PoliCy with John Kelly

38 usDa with Jessica Adelman

41 BlogsWorth Following

42 lEviCKIn the News

05

CongrEssional invEstigations

― with ― Mark Paoletta

Do you foresee any likely change in this new Congress, in terms of either increased or decreased aggressiveness in how it goes about its investigatory mission?

mark Paoletta: With the partisan divisions

unchanged, it will be difficult to pass sig-

nificant legislation, and therefore there will

be an increase in oversight activity in both

chambers, particularly with the Republican

House. From the Affordable Care Act to the

Dodd-Frank legislation, the GOP will use its

oversight powers as a means to try to blunt or

alter the implementation of the Obama Admin-

istration’s signature programs.

House Chairmen got their sea legs last Con-

gress on oversight. The E&C Committee made

Solyndra a household name and the Oversight

Committee made the Fast & Furious inquiry a

major issue. Chairman Upton (of E&C) and Issa

marK PaolEtta

To discuss how Congress will pursue investigations and hearings in the next four years, we spoke to Mark Paoletta, a partner at DLA Piper. Mr. Paoletta has worked in both the public and private sectors, including positions in the White House Counsel’s Office and on Capitol Hill as a Chief Investigative Counsel for the House Energy & Commerce Committee for a decade. His work focuses on government investigations, with an emphasis on congressional investigations and hearings.

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(Oversight) will lead the oversight work in the

House again next year. Expect to see a number of

other committees step up their oversight work.

are there any particular different directions—in particular, specific industry sectors—that Congress will be emphasizing or deemphasizing as investigatory targets after January?

mark Paoletta: The health care sector will

see a significant uptick in oversight activity.

During the campaign, the President talked a

lot about finding savings in rooting out waste

fraud and abuse in this sector. Both chambers

will look aggressively for these savings by

conducting significant oversight both into the

agencies and the contractors. Second, there is

still much to implement in the Affordable Care

Act, and at least two House committees (E&C

and Ways & Means) will conduct inquiries

into how it is being implemented, what are the

costs, issuance of waivers, and quality of care.

They will use their oversight powers to shine a

light on what is happening and perhaps affect

the rules being implemented.

We will see similar efforts in the financial

services and energy/environment sectors.

Dodd-Frank still has many significant regula-

tions that are still being implemented, and the

House GOP will scrutinize these regulations

and try to modify the final rules. EPA’s regula-

tions on utilities and other sectors of the U.S.

economy have been very controversial and

several House committees (notably E&C) will

continue to do vigorous oversight in this area.

Cyber security will emerge as an even more

significant topic of oversight. The House Intel

committee recently issued a draft report on cy-

ber security threats from China, and this issue

will be a top priority in several committees,

including Energy & Commerce and Homeland

Security committees and their counterparts

on the Senate side. It’s a hot button issue, and

I think you will find a great deal of bi-partisan

cooperation to identify and craft effective solu-

tions to this threat.

Expect to hear a lot more about what hap-

pened in Benghazi. House Oversight held a

hearing last month and I expect several others

committees to investigate and have high-profile

hearings. Defense contractors will also come

under increased scrutiny, in particular with

the hiring of a highly-regarded former pros-

ecutor and congressional chief investigative

counsel as the head of SIGAR. He has already

delivered some interesting audits and testimo-

ny in his first months in the job.

Of course, there will be many issues that will

drive the oversight agenda in the next Con-

gress that are not even on the horizon. For

example, the meningitis outbreak recently

came on the radar and it has at least a couple

of Committees working hard to figure out how

this happened. And don’t forget that second

terms of Presidencies usually provide several

scandal-type episodes that will be sure to cap-

ture Congressional attention.

as a result of the election, are there any key individuals who will be either relinquishing or assuming investigatory roles that will change the dynamics in a way that affects your clients?

mark Paoletta: The House Energy & Com-

merce Committee will have a new Subcommit-

tee Chairman of its Oversight & Investigations

Subcommittee, and front runners include

Representatives Blackburn, Terry, and Bur-

gess. The committee has a newly-promoted

chief counsel who is very seasoned, having

just run the Solyndra investigation. The Finan-

cial Services committee put a bright spotlight

on the MF Global scandal. Incoming Chairman

Hensarling recognizes the value of aggressive

oversight and I expect the committee to con-

tinue with this type of work.

The Ways & Means Committee recently hired

an impressive chief oversight counsel and, in

fact, the committee’s staff director is a former

chief oversight counsel so I would look for this

committee in particular to get more engaged in

very aggressive oversight. Chairman Camp has

built a team to conduct some serious oversight.

On the Senate side, the Senate Government

Affairs and Homeland Security will continue

to have the lead role in oversight, along with

its Permanent Subcommittee on Investigations

(PSI). Chairman Lieberman is retiring and is

expected to be replaced by Senator Carper.

Ranking Member Collins, who is term limited,

is expected to move to PSI as the Ranking Mem-

ber and Senator Coburn is expected to take the

Ranking Member slot on the full Committee.

Chairman Levin is expected to keep his inves-

tigative focus on banking and other financial

and tax issues. Senator Grassley continues to

be very involved in oversight work. L

“ Cyber security will emerge as an even more significant topic of oversight. The House Intel committee recently issued a draft report on cyber security threats from China, and this issue will be a top priority in several committees, including Energy & Commerce and Homeland Security committees and their counterparts on the Senate side. It’s a hot button issue...”

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next steps at the

ConsumEr FinanCial ProtECtion BurEau

with Jonathan Pompan

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since its inception, we’ve see the CFPB focused predominantly on issues pertaining to “at-risk” groups such as veterans, seniors, and students. Do you see that continuing, or will the Bureau begin to broaden its approach?

Jonathan Pompan: The focus on student loans,

home buying, retirement, and service members

will continue. But it’s important to note that,

thus far, the Bureau has been merely setting

the table for what will be more scrutiny and

more aggressive proposals for reforms in

those areas.

It’s also important to note that the “fiscal cliff’

will have no effect on the Bureau, which is

funded through the Federal Reserve. At the

same time, a second term for the President

spells real trouble for efforts to reorganize or

eliminate the Bureau altogether. The President

is a staunch CFPB supporter and Elizabeth War-

ren’s ascendency into the Senate puts a vocal

champion into a high-profile position. Perhaps

the only safeguard for moderating the Bureau’s

influence is the courts; but none of the legal

challenges brought to date have yet been effec-

tive in that regard.

Simply put, it seems that the CFPB is here to

stay—and, as a result, financial service pro-

viders need to double down on compliance

and brace for more scrutiny. At the same time

however, they also need to foster productive

relationships with relevant staff at the Bureau

in order to move from an adversarial rapport

to one that it is rooted in cooperation and a

shared pursuit of market fairness.

How do you see Congress’ work with the CFPB evolving as a result of the election? Do you see the relationship warming or cooling over the coming years?

Jonathan Pompan: The House of Representa-

tives, in particular, will continue to be a source

of scrutiny and criticism for the Bureau, as

adversarial Republicans maintained their

majority. While the Democratic majority in

the Senate will temper the efforts to restruc-

ture the Bureau, in the Senate, there will be

the question of another term for Director

Richard Cordray or confirmation of his even-

tual replacement. All of this means that the

relationship between some on Capitol Hill and

the CFPB is likely to remain contentious, but

any real changes would require the President

and Democrats to compromise. As result, the

Bureau will remain in the news.

That will lead to interesting questions about

how various financial services providers

choose to involve themselves in the public

debate. They all have a great deal of skin in

the game and each will have to carefully

consider the pros and cons of wading into the

fray from their own particular perspectives.

How do you see priorities changing—or not changing—at the CFPB as a result of the election? What issues will dominate the agency’s attention in the coming months and years?

Jonathan Pompan: Just about everything

we’ve come to know about the CFPB is going

to remain the same for at least the next year—

and likely for the next two years. This means

that the CFPB is going to continue increasing

its regulation over banks and non-banks. The

Bureau has open investigations in virtually all

the market areas under its jurisdiction; such

as private student lenders, mortgage servicers,

payday lenders, debt collectors, and more.

The fact that the President has won reelection

means that these investigations will continue

unabated, and that more are certain to come.

JonatHan PomPan

To examine the ways in which the newly-established Consumer Financial Protection Bureau (CFPB) will evolve under President Obama’s second term, we spoke with Jonathan Pompan, an Of Counsel with Venable LLP. Mr. Pompan focuses his practice on providing comprehensive legal advice and regulatory advocacy in the areas of consumer protection and financial services.

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FDa Priorities with Joseph a. levitt

How do you see priorities changing at the u.s. Food and Drug administration as a result of the election? are there particular hot-button issues, such as food labeling, which might see more or less attention?

Joseph levitt: FDA’s top priority in the food

area has been implementation of the FDA

Food Safety Modernization Act (FSMA)—and

that will most certainly remain the case.

Proposed rules that have long been under re-

view at the Office of Management and Budget

should soon break loose and be published for

public comment.

On the nutrition side, FDA is expected to

publish final regulations on menu and vend-

ing machine labeling of product calories. I

would also be on the lookout for FDA to step

up efforts to reduce sodium levels in a wide

range of foods.

How will the election results impact the FDa budget? What do new funding levels mean for the food and pharmaceutical companies that FDa regulates?

Joseph levitt: Regardless of the election

results, the prospects of the fiscal cliff and

possible sequestration mean that budgets

across all federal agencies will be severely

constrained. Even if Congress and the Admin-

istration can reach a deal to prevent a worst

case scenario, the Food and Drug Administra-

tion budget is likely to be limited for years to

come—and especially in the foods area.

FDA will adopt FSMA regulations and take

other actions mandated by law, but, due to

resource limitations, the agency will have to be

selective in its enforcement activities. As such,

companies will have to watch closely to see

how those priorities evolve.

Do you see the FDa as being more or less receptive to business concerns as a result of the election? are there particular issues on which businesses and the FDa will be able to work more closely?

Joseph levitt: Under President Obama’s

first term, FDA conducted an unprecedented

amount of outreach to the food industry and

other stakeholders, and the agency is to be

commended for coming across as wanting to

publish proposed rules that are both scientifi-

cally sound and economically feasible. The

goal for achieving such commonality on the

nutrition side may be more challenging, as the

Administration is expected to double down on

its initiatives to combat childhood obesity.

One new opportunity for collaboration with

the food industry will be in the area of geneti-

cally engineered foods, where FDA and food

industry positions have been historically been

quite similar. California’s Prop 37 has again

raised this issue’s visibility and it’s clearly not

going away. As such, food companies should

be communicating with the agency to ensure

continued alignment on their approaches to

producing, labeling, and marketing foods that

contain bio-engineered ingredients. L

JosEPH a. lEvitt

To discuss how the election impacted regulatory priorities at the U.S. Food and Drug Administration (FDA), we spoke with Joseph A. Levitt, a Partner in the law firm of Hogan Lovells US LLP and former Director of FDA’s Center for Food Safety and Applied Nutrition. Joe counsels numerous food companies and trade associations on food safety, labeling and compliance matters, and how to work effectively with the FDA. He is also a recognized expert in the FDA Food Safety Modernization Act (FSMA), including all phases of its development and implementation.

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How has the election most dramatically impacted the healthcare industry? What do doctors, hospitals, insurers, and pharmaceutical manufacturers need to know about what’s coming next regarding legislative and regulatory priorities?

laura Bozell: The biggest takeaway is that not

much is going to change. Implementation of

the Affordable Care Act (ACA) is going to con-

tinue and industry players need to accept the

reality that the law is not likely to be repealed.

Those that have been delaying preparations

now face implementing a law that still lacks

many necessary regulatory elements and will

be awaiting further details on what to expect

between now and January 1, 2014.

There will also be the annual fight in Congress

over the sustainable growth rate—the physi-

cian payment mechanism within Medicare that

seeks to discourage doctors from initiating rap-

laura BozEll

For our examination of the election’s impacts on healthcare policy, we spoke with Laura Bozell, a Vice President at Cornerstone Government Affairs. For the last five years, Laura served on the Professional Staff on the Ways and Means Committee’s Health Subcommittee. In this capacity, she was responsible for the Medicare Part A portfolio, providing policy direction for the Committee and advising the Chairman and other Committee Members on issues affecting the nation’s 6,000 hospitals, home health providers, skilled nursing facilities and all other post-acute care providers.

HEaltHCarE PoliCy with Laura Bozell

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id increases in volume of services. If Medicare

spending increases too fast, a cut kicks in—and,

right now, there is a 27 percent cut looming if

Congress takes no action to stop it. If Congress

does act, as it undoubtedly will, it might look to

other parts of the Medicare program for spend-

ing cuts to balance the increased costs incurred

by fixing the physician payment system.

Finally, there is the question of sequestration.

Under the Budget Control Act, Medicare cuts

are capped at two percent should sequestra-

tion kick in. If that should come to pass, it will

impact every healthcare provider that deals

with the Medicare program, although we

do not yet have a clear idea of how it will

be applied.

What are the major issues with medicaid moving forward?

laura Bozell: Right now, the big issue I see

surrounds the Supreme Court’s decision to

make the ACA Medicaid expansion optional

for states. Specifically, that decision may have

the unintended effect of stranding a number

of disadvantaged people that potentially won’t

qualify for Medicaid or the subsidies available

to purchase health insurance through the new

state-run exchanges. In many states, childless

adults and even some children living below

100 percent of the poverty level are ineligible

for Medicaid and, because of the way the ACA

was written, they are also ineligible for exchange

subsidies. If their state opts out of the ACA

Medicaid expansion, these people may find

themselves without any health care coverage.

So unless Congress acts (which doesn’t seem

likely), there will be pockets of people that are

left on the outside looking in.

The problem for providers is that they agreed

to the ACA’s cuts precisely because everyone

was going to have health insurance coverage.

If you have a subset of people who still aren’t

covered, the providers will have to cover the

costs of treating them. The issue is further

complicated by the fact that in 2012 Congress

L

reduced hospitals’ bad debt reimbursements

from 70 percent to 65 percent.

All of this means that providers have a great

deal of incentive to work with Congress and

the White House to see that Congress acts on

this critical issue.

How has the election impacted the healthcare regulation landscape? How can providers, insurers, and others in the healthcare industry ensure their voice is heard as aCa implementation moves forward?

laura Bozell: There is a tremendous amount

of ACA-related regulation that was being slow-

walked before the election. Now, it will all be

coming down the pike in huge waves. To date,

some ACA regulations have been introduced as

interim final rules, bulletins or even guidances

that do not allow for the traditional 60-day

comment period—thus limiting the industry’s

influence. I expect there to be some congres-

sional oversight on this issue. My hope would

be that new rules will be promulgated in ways

that allow for greater transparency and in-

dustry input. But, at the same time, HHS has a

short period of time to meet a lot of deadlines.

Once that happens, industry players should

make the most of every opportunity to have

their say in the writing of rules that will define

the health care system for some time to come.

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HomElanD sECuritywith Michelle Mrdeza

How will DHs priorities change as a result of the election? What can we expect to happen to the DHs budget over the next 2-4 years?

michelle mrdeza: Homeland Security priori-

ties are unlikely to dramatically change during

the President’s 2nd term and 113th Congress.

This is true for several reasons.

First, threats remain the same and major

programs continue to collect broad biparti-

san support: cyber security, aviation security,

cargo inspection, and disaster response and

recovery. Second, there is unfinished business

that both the Administration (and some in)

Congress want to tackle, not the least of which

is immigration reform and cyber security, both

of which pertain directly to homeland security.

However, remember the devil is always in the

detail. What might be different over the next

four years despite a fairly constant emphasis

on our highest threats? The degree to which

the federal government involves itself in issues

such as cyber security might be different, as

miCHEllE mrDEz a

To understand the impact of the 2012 elections on America’s approach to homeland security, LEVICK spoke to Michelle Mrdeza, who leads the homeland security practice group at Cornerstone Government Affairs. Ms. Mrdeza is a twenty-three-year Capitol Hill veteran, including four years as Majority Staff Director of the House Committee on Appropriations, Subcommittee on Homeland Security.

Anthony Correia / Shutterstock.com

20 21

might the size of that government involvement

in real dollars.

Similar to most other non-defense discretion-

ary programs, we can and should expect to see

a shift in funding for DHS. While homeland se-

curity in general and the Department of Home-

land Security (DHS) in particular have enjoyed

significant support from Congress and the

Administration over the past eleven years, fis-

cal realities will temper efforts to “super size”

everything that’s homeland security-related.

Homeland security is no longer immune to belt

tightening, as observers are seeing as the 112th

Congress winds down its work on the fiscal

year 2013 appropriations bills. Both the House

and Senate DHS spending bills are below the

fiscal year 2012 enacted levels and DHS will

be subject to the across-the-board sequester

scheduled to go into effect on January 2, 2013.

The challenge for decision makers is how to

cut or reduce programs in a way that will have

neither an immediate impact on daily opera-

tions nor a longer-term impact on homeland

security. This challenge will be difficult when

the country continues to face direct threats to

domestic security—for example, the recently

disrupted plots to bomb the Federal Reserve in

Manhattan, the Washington Metro system, and

the United States Capitol complex.

Of course, all the talk about belt tightening did

not necessarily consider the wrath of Hurri-

cane Sandy. While it is way too early to predict

the financial impact of that major event and the

federal cost, we do know efforts are underway

to calculate what FEMA might need as the East

Coast continues to recover. The Budget Control

Act of 2011 allowed for emergency spending

but ultimately this spending will only contrib-

ute to the deficit and the challenges of dealing

with the fiscal cliff.

Has the election created new opportunities for the defense and security companies? are there new challenges that these industries will have to overcome?

michelle mrdeza: There will always be oppor-

tunities for transformational technologies within

the defense and security space. DHS simply can-

not achieve its mission without the technology to

innovate solutions that help achieve security and

efficiencies. Again, what will change is the avail-

ability of dollars. Absent a major catastrophic

event, dollars will continue to shrink and the

landscape will become increasingly competitive.

The challenge for companies will be to under-

stand where both the Administration and Con-

gress will put the taxpayers’ limited resources

and to follow that money.

How do you see DHs policy evolving with regard to cyber-security? are there unique opportunities emerging for companies that specialize in data protection?

michelle mrdeza: Cybersecurity will remain

one of the top priorities for both the Admin-

istration and Congress. Absent some form of

legislation that moves quickly through a lame

duck session (and there is some speculation that

Congress may try to do just that), the Administra-

tion is poised to issue an Executive Order, which

we expect sooner rather than later now that

elections are behind us.

Similar to opportunities for transformational

technologies across the homeland security

space, there will always be opportunities within

cyber security, particularly those that protect

data. One of the main sticking points in security

cyber security legislation has been information

sharing as the ability to protect information is

critical to achieving a workable solution. L

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023

How do you see the election impacting policy at the federal labor agencies, particularly the Department of labor (Dol) and the national labor relations Board (nlrB). are there specific areas that will come under increased scrutiny from a monitoring and enforcement perspective? are there areas where efforts will be scaled back?

maurice Baskin: Both the NLRB and DOL

have been pushing a strongly pro-labor regu-

latory agenda under President Obama, par-

ticularly since the Democrats lost their chance

to enact pro-union legislation after the 2010

Congressional elections. During the last six

months, the Administration postponed a num-

ber of significant policy changes until after the

Presidential election, apparently to avoid any

negative political effects. Now that Obama has

won, expect the freeze to be lifted, unleashing

a flood of new regulations and agency rulings

from both DOL and NLRB.

The most likely new rules to be issued post-elec-

tion include the DOL’s “persuader” rule, which

radically changes the “advice” exemption. It

will make it much harder for companies to get

EmPloymEntwith Maurice Baskin

laBor mauriCE BasKin

To address the impact of the election on labor and employment issues, LEVICK spoke to Maurice Baskin, a partner in the Labor and Employment Law Practice Group at Venable in Washington, DC. Mr. Baskin counsels management on all aspects of labor and employment law, including union organizing, collective bargaining, wrongful discharge, employment discrimination, arbitration, government contracts, wage/hour law and “prevailing” wages, executive agreements, unfair competition, and personnel advice.

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“ I would expect legislative gridlock to continue on the labor issues and no significant legislation is likely to pass both houses... and there’s not much hope of Congress intervening to stanch the flow of ongoing regulatory initiatives, except perhaps in the most extreme cases.”

outside advice on responding to labor activities

and communicating to employees—and even

criminalize failure to disclose the fact that they

do rely on third parties. The NLRB’s “ambush”

election rule, currently tied up in the courts

on procedural matters, likewise decreases the

employer’s options because it significantly

shortens the time between a union’s filing for

election and its holding one.

Other rules include a radical proposal by the

OFCCP [Office of Federal Contract Compliance

Programs] for an affirmative action rule for

disabled workers of government contractors.

It will substantially increase the cost of compli-

ance for government contractors and poten-

tially result in fewer qualified bidders.

There’s much more. For example, redoubled

efforts by the Administration to impose union-

only project labor agreements on government

construction projects, which have been hotly

contested, will if successful effectively shut out

non-union companies—around 80% of

the total pool—from competing for a share

of the biggest projects, at an increased cost to

taxpayers.

We’re also looking at the continued expansion

of wage and hour enforcement and cover-

age. DOL is expected to continue to challenge

employer classifications of workers, both as to

their exempt or non-exempt status for purpos-

es of overtime, as well as the workers’ status as

employees versus independent contractors.

Court challenges are pending against an NLRB

micro bargaining unit rule that makes it easier

for unions to carve out smaller, special interest

segments of the total employee population as

“appropriate units” for union elections. If that

challenge fails, then employers should

expect to see increased union organizing and

a proliferation of bargaining obligations. Also

pending in the court of appeals is a challenge

to the NLRB’s unprecedented notice of rights

poster rule, which would force some six million

employers to post notices telling workers how

to unionize. More NLRB rulings are expected

permitting greater union access rights, and

there have been an increasing number of NLRB

cases involving new challenges to employee

handbooks.

More regulations and tougher enforcement are

also expected now from OSHA, again with po-

tentially significant costs for employers. And,

of course, with Obamacare now impervious

to repeal, all of the economically burdensome

taxes and regulations, primarily aimed at em-

ployers, will become facts of life during 2013.

How has the election impacted Congress’ work on labor issues? What can we expect over the next two years with regard to labor legislation?

maurice Baskin: I would expect legislative

gridlock to continue on the labor issues and

no significant legislation is likely to pass both

houses. This inaction makes all the regulatory

agenda items I’ve mentioned even more im-

portant because it means that there’s not much

chance of undoing or reforming the relevant

legislation, and there’s not much hope of Con-

gress intervening to stanch the flow of ongoing

regulatory initiatives, except perhaps in the

most extreme cases.

What are now the most significant opportunities for industry and government to work together on labor issues?

maurice Baskin: It is hard to envision much if

any industry/government cooperation on labor

issues, in light of the Administration’s regula-

tory agenda and the Congress’s inability to act.

So what this election ultimately means in the

labor and employment arena is that we will be

looking at a long succession of new mandates

and legal challenges over the next four years.

The government will issue orders and, if the

legal challenges fail, employers will have no

choice but to obey, if they can stay in business

at all under the increased regulatory burden.

That is not a recipe for cooperation between

business and government, nor does it seem to

be a good plan for job creation. L

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media lessons

What can businesses learn and leverage from the ways that candidates utilized social media during the 2012 election cycle? are there trends emerging that impact public and private sector outreach alike?

Peter Fenn: This election showed more than

any other—even 2008—the value of the per-

sonal connections that social media facilitate.

We are witnessing a remarkable technological

advance that allows us to precisely target vot-

ers, opinion makers, consumers, and average

Americans in ways that help us determine

what their interests, likes, and dislikes are. In

turn, we are able to reach out to them in ways

that breed a real sense of familiarity. It’s as

if we’re talking to them in the grocery store

aisles or over the backyard fence. In many

ways, it’s as if social media have brought us

“back to the future.”

The Obama Campaign did a tremendous job

of leveraging social media to connect with vot-

PEtEr FEnn

With the passing of every election cycle, we learn multitudes about the ways in which the media landscape is evolving. To discuss the lessons gleaned in 2012, we spoke with Peter Fenn of Fenn Communications Group, one of the nation’s top political and public affairs media strategists. Since 1983, he has worked on more than 300 national, statewide, and local campaigns and represented numerous Fortune 500 companies.

with Peter Fenn

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to Facebook friends in swing states to ensure

they got to the polls. The campaign found that

when five of a potential voter’s friends reached

out, that potential voter was transformed into

a real voter because he or she was contacted

by someone familiar, rather than via TV or an

anonymous email address.

That’s the real value of social media—and it is

changing communications as we know it.

ers in ways that were genuine, authentic, and

exceedingly likely to establish strong personal

relationships. Voters weren’t just being con-

tacted by campaign personnel; they were being

influenced by their friends. In the end, that

made all the difference in getting out the vote

and aptly demonstrated the declining value of

traditional advertising.

For instance, Obama supporters could down-

load a mobile application in the final weeks of

the campaign that enabled them to reach out

What did we learn about the future of traditional media during the 2012 election cycle? in an increasingly digital world, how are consumers of goods, services, and public policy interacting with the television and print outlets that once dominated the landscape?

Peter Fenn: The latest figures show that $1.1

billion was spent on television advertising—

and my guess is that figure will rise substan-

tially when all is said and done. But the real

question isn’t what was spent; it’s about the

return on that investment. Traditional media

have become the “pay more, get less” option

today. Campaigns feel that they have to engage

on TV and in print, but I would argue that

about 90 percent of that money is wasted.

My sense is that we are going to see more

campaigns putting more resources into social

media in future election cycles. In 2008, politi-

cal messages went viral and garnered tens

of millions of hits. In 2012, those numbers

were even higher. Think about Romney’s “47

Percent” remark or Obama’s “You Didn’t Make

That” claim. More people saw those on their

computers than on TV. That tells us a great

deal about where smart voter outreach is

headed in 2014 and beyond.

How has the public affairs landscape changed as a result of the election? Which industries saw their influence grow? Which will have to work harder over the next two-to-four years to achieve their policy goals?

Peter Fenn: Now that the President has won a

second term, we are going to see implementa-

tion of Dodd-Frank and the Affordable Care Act

move full speed ahead. But I believe that this

Administration is one that is willing to work

closely with industry to solve the nation’s big-

gest problems. There will have to be compro-

mises where the fiscal cliff is concerned—and

those compromises may set the stage for real

return to consensus building and cooperation

not only across the political aisle; but between

the public and private sectors as well.

As such, I would advise healthcare and finan-

cial services providers to do all they can to

ensure a seat at the table as Dodd-Frank and

the ACA round out into form. They will have

chances to make their voices heard—and

they need to make the most of every opportu-

nity to do so. L

“ social media..is changing communications as we know it.”

tHE rEgulatory lanDsCaPE

with andrew zausner

Weekly

32 33

There are two mitigating factors. One is that

deals on various issues might actually get cut

with Congress that will encourage the Obama

Administration to back off on the regulatory

front to some reasonable degree or another.

The other is that many of the proposed rules

will wind up in court, which at the very least

will give businesses some breathing room. Best

case scenario, they’ll die there.

The industries affected will cover a wide

gamut. There’s no question that fracking will

continue to be a focal point for regulatory ac-

tivity. As an enforcement priority, the consum-

er-oriented provisions of Dodd-Frank should

get a lot of renewed attention from the Obama

Administration. FDA actions will increase

across the board: food, drugs, and tobacco. In

the aftermath of the meningitis outbreak, the

compounding pharmacies will be a target for

some time to come.

What changes are in store for regulatory budgets across the federal government? What challenges and opportunities may arise for the larger business community as a result of these changes?

andrew zausner: While there will be an

invigorated political climate for regulatory

activity, budgetary factors are a stress point,

although enforcement will be the last regula-

tory area that will be cut. In the months ahead,

the lame duck Congress will be focusing on the

fiscal cliff but, whatever the results of those

deliberations, discretionary spending will be

How do you see federal regulatory prerogatives shifting as a result of the election? are there particular areas that are positioned for greater levels of scrutiny and enforcement?

andrew zausner: During the past four years,

the Obama Administration has shown that,

when it cannot get the results it wants through

legislation, it does so by exercising Executive

Power via regulation. The next four years will

be no different.

Predictably, then, the business community can

expect an unremitting barrage of new regula-

tory burdens as well as an intensified focus on

enforcement. For businesses, the situation is

exacerbated because, for months now, there’s

been a sizable queue of regs at the OMB [Office

of Management and Budget] that the Obama

Administration has not issued or publicly dis-

closed for political reasons during the campaign

season. There will now be a push to clear that

docket, and to create room to introduce more.

affected. That’s something of a mixed bless-

ing for business, as companies’ user fees will

increase, perhaps dramatically.

The salient opportunity for business is probably

not related to the overall budget for regulatory

activity per se, as it involves some decision-

making that has to be made in fat times or lean.

It’s all about the design of any new regulation,

and whether or not there are competitive ad-

vantages for companies in what the final result

looks like. That means businesses must make

decisions whether to fight an impending reg, or

to embrace it—to collaborate in its making in

order to minimize the fallout or, hopefully, real-

ize a marketplace advantage.

How has the election impacted companies’ ability to work with the government toward a less burdensome regulatory environment?

andrew zausner: President Obama himself

said it best in 2009: “Elections have conse-

quences.” It seems pretty apparent that this

election has negatively impacted the ability

of companies to use their influence toward

a less burdensome regulatory environment.

That said, all Presidents fret dearly over their

legacies and this one may yet see how a more

collaborative approach on the regulatory front

is very much in his interests.

anDrEW zausnEr

For commentary on the impact of the elections on federal regulation, LEVICK spoke to Andrew Zausner, a partner at Dickstein Shapiro LLP and a member of the firm’s Public Policy & Law Practice. Mr. Zausner has served as counsel on a myriad of legislative and regulatory issues with a primary focus on matters that relate to energy and natural resources. Among the legislative issues that he has concentrated on are the Energy Policy Act of 1992, the National Energy Security Act of 1991, and the Clean Air Act Amendments of 1990.

L

Weekly

34 35

We heard a great deal about tax reform during the 2012 election cycle. Now that the voters have spoken, how much change are we really likely to see? Who stands to benefit most from potential reforms? Who will benefit least?

John Kelly: The outlook for tax policy and the

prospects for meaningful tax reform remain

muddled after what amounts to a status quo

election.

What happens prior to the end of the year

when lawmakers attempt to deal with the

approaching fiscal cliff will set the stage for

consideration of tax reform. Congress will con-

vene in a lame duck session over the next six

weeks principally to address the coming fiscal

cliff—the budget sequester, expiring tax cuts,

and the like. With regard to the lame duck

session beginning next week, it is important to

note that Congress will not rewrite the Inter-

nal Revenue Code over the next few weeks.

While it remains to be seen how it plays out

over the coming weeks, there are some conclu-

sions to be drawn with the elections behind

us. By most accounts, any agreement struck

by Congress and the Administration during

lame duck to address the fiscal cliff will likely

extend most if not all the expiring Bush tax

cuts into if not through 2013. If that’s the case,

there will be significant tax reform implica-

tions. A lame duck agreement to temporarily

extend the 2001 and 2003 tax cuts in and of

itself will establish some context as well as

a budget baseline for a comprehensive tax

reform debate in 2013.

TAX POLICYwith John Kelly

Congress will likely include a legislative road

map for tax reform in the form of expedited

process and timeline to facilitate passage of

a bill in the next Congress. The House passed

one such measure earlier this year. With the

election results maintaining a relatively slim

Democratic majority in the Senate and a Re-

publican majority in the House, some sort of

fast track legislative process similar to budget

reconciliation may be the only way Congress

can conceivably pass major tax legislation

through both chambers in the next Congress.

A temporary extension of the Bush tax cuts

would naturally establish a deadline for tax re-

form legislation, probably at the end of 2013. Un-

less a tax reform bill is passed in 2013, the fiscal

cliff scenario plays out all over again a year from

now. It is hoped that that may provide enough in-

centive to work productively toward enactment

of comprehensive reform legislation.

With respect to the actual content of tax reform,

clearly the Obama and Romney campaigns had

vastly different visions. We are not likely to

see fundamental changes to the tax system in

Obama’s second term relative to what a Romney

administration would have put forward.

Although the smoke has yet to clear, winners

in terms of tax policy include the renewable

energy sector, which has seen mounting criti-

cism of targeted tax breaks designed to jump-

start the industry. Many of those tax credits

are set to expire. Tax provisions favoring the

manufacturing sector such as the research

credit will continue to receive support from

JOhN KeLLY

For insights on how the 2012 elections will affect tax policy, we spoke to John Kelly of Cornerstone Government Affairs. Mr. Kelly has 25 years of government relations work in public and private sector tax policy. he was formerly Director of Federal Government Relations for wal-Mart Stores, inc. and served as the tax legislative Advisor to the Assistant Secretary for tax Policy at the U.S. treasury Department, where he led the office of tax Policy legislative efforts.

Weekly

3736

this administration. Conversely, oil and gas pro-

visions targeted by Obama during the campaign

will be in play as a way of paying for other

tax proposals or addressing mounting budget

deficits deficit. U.S. corporations with overseas

operations will continue to be forced to defend

against the perception that competition in the

international marketplace comes at the expense

of U.S. jobs.

To the extent that any major tax policy changes

are ultimately made permanent, in the long run

businesses will benefit from by certainty in the

tax laws. U.S. businesses have been hampered

by a tax code teeming with temporary and

expiring provisions. We expect a great deal of

focus on eliminating temporary tax provisions

from the code if they can’t be made permanent.

What do large corporations and small businesses need to be doing now to pre-pare for the most likely changes in tax policy? How can they best leverage the changes to come?

John Kelly: U.S. businesses, large and small,

need to be engaged in discussions with law-

makers surrounding inevitable changes in tax

policy in the next Congress. The status quo

election may have narrowed the scope of tax

reform options. But the most substantive debate

over tax policy in decades will take place in

the next Congress whether or not legislation is

signed into law.

Large businesses will have to come to terms

with the idea that, for example, a reduction in

the corporate tax rate will come at a cost. Under

Obama, international tax policy will be viewed

more through the prism of deficit reduction and

compliance rather than competitiveness and

simplification. U.S. multinationals will find little

clarity in this area as a result of the election.

Small businesses, especially pass-through enti-

ties like partnerships, S Corporations and sole

proprietorships, will inevitably get swept up in

debate over individual tax rates. Under Obama,

the top individual tax rates—those paid by

pass-throughs—will not be reduced and are

likely to increase for those in the top brack-

ets. That said, any reduction in the corporate

rate brings into play numerous business tax

benefits affecting both corporations and small

business pass-throughs. Certain small business

ownership structures such as master limited

partnerships will also face scrutiny.

Businesses in general need to frame the dis-

cussion over tax reform in terms of economic

recovery and job creation before tax policy de-

cisions are made law makers in the context of

deficit reduction and higher taxes. Tax reform

will inevitably involve winners and losers and,

if there is a takeaway from the election, the list

of winners in the business sector got shorter

while the list of losers may have gotten longer.

What changes are in store for the treasury Department as a result of the election?

John Kelly: Treasury Secretary Timothy

Geithner announced his intention to leave

the administration at the end of Obama’s first

term. The choice of Geithner’s successor will

send an important signal for how high a prior-

ity tax reform will be in the President’s second

term. Comprehensive tax reform and, for that

matter, any major tax legislation is virtually

impossible without Presidential support and

leadership. In the run-up to 1986, the last

major rewrite of the tax code, Treasury

played a critical role throughout a process

that began with a plan drafted by President

Reagan’s Treasury Secretary at the end of his

first term in 1984.

Speculation over President Obama’s pick for

Treasury Secretary in his second term has

centered around two contenders: White House

Chief of Staff Jack Lew and Erskine Bowles

who co-chaired the President’s bipartisan

deficit reduction panel. By many accounts Lew

has an inside track. He served the President

as director of OMB and in 2010, he served as

one of Obama’s key negotiators when the Bush

tax cuts were temporarily extended. But it was

his role in the failed budget negotiations in the

summer of 2011 (the so called Grand Bargain)

that drew sharp criticism from Congressional

Republicans. Consequently a nomination to

Treasury Secretary may not be viewed as a

post- election olive branch when it comes to

tax reform.

In contrast, if Obama were to nominate Bowles

as Treasury Secretary, it would be a sign that

the President intends to prioritize tax reform

during his second term. The President’s deficit

panel, the so called Simpson Bowles Commis-

sion, laid out several options for comprehen-

sive tax reform though the report was largely

ignored by the administration. Bowles enjoys

good relationships with members of congress

on both sides of the aisle by virtue of his time

on the committee. Interestingly, Bowles has

had kind things to say about Paul Ryan’s bud-

get plan, which passed the Republican con-

trolled House earlier this year.

I would expect President Obama to make tax

reform a centerpiece of his State of the Union

address in February and to use the occasion to

instruct his new Treasury Secretary to draft a

comprehensive tax reform proposal.

Either way, the Treasury Secretary must be

confirmed in the Senate and face a confirma-

tion hearing before the Senate Finance Com-

mittee chaired by Sen. Max Baucus (D-MT). We

can assume tax reform will be front and center

in the confirmation process regardless of the

nominee for Treasury Secretary. L

39

what’s next at USDA

― with ―Jessica Adelman

How do you see priorities shifting at usDa as a result of the election? are there particular issues that are positioned for greater scrutiny?

Jessica adelman: As with a number of regula-

tory agencies across the federal government, I

think that we can expect the positive trends at

USDA to continue into the President’s second

term. Most important, USDA has done an

outstanding job of recognizing where process

improvements could take place and acting

to implement them. I would expect that con-

structive trend to continue; as agriculture is an

economic story this Administration can hold

up as a success.

The acceleration of biotechnology trait deregu-

lation is a great example. Agricultural exports

are one of the brightest spots in this economy.

We were seeing what had previously been a

smooth regulatory process bogged down by

hurdles and litigation. That enabled key global

competitors—such as Brazil—to gain access to

JEssiCa aDElman

For an in-depth look at what to expect from the U.S. Department of Agriculture (USDA) under President Obama’s second term, we spoke with Jessica Adelman, Vice President for North America Corporate Affairs at Syngenta. Ms. Adelman oversees numerous teams throughout the United States who focus on federal government relations, media relations, thought leadership, corporate social responsibility, internal communications and agriculture industry affairs.

Weekly

40

the best agricultural technologies ahead of the

U.S. farmer. Now, the USDA—led by a Secretary

who understands just how crucial this issue is

to American competitiveness—has pledged to

cut the red tape and reassert itself as the criti-

cal farm partner.

I would hope and expect that level of coopera-

tion to continue to be a USDA hallmark mov-

ing forward.

What is in store for the usDa budget? How might impending cuts impact the companies that usDa regulates?

Jessica adelman: The big question comes in

terms of the Farm Bill, which has two com-

ponents—Fair Play and Nutrition Titles—that

will be competing for limited resources. Nu-

trition Titles include initiatives such as food

stamps and school lunch programs that are

going to be very challenging to cut from a

political perspective. That means farmers and

food manufacturers are going to need to pull

congressional leaders and the White House

together to help ensure that Fair Play funding

levels remain conducive to U.S. grower success

in global markets.

In terms of inspections and enforcement, I

don’t see USDA dropping off in any significant

fashion. The agency is more consumer-facing

than most and the team there is great at what

they do. They understand their responsibility

to the American public and, regardless of

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budget cuts, I am sure they will do their best

to fulfill their duties wherever food safety

is concerned.

How do you see usDa’s relationship with industry evolving over the next four years?

Jessica adelman: I see the potential for a great

deal of cooperation between USDA and the

industry it regulates. Right now, everyone has

a vested interest in creating jobs and getting

the economy moving again. That means there

is room for farmers and food manufacturers

to start a conversation about how USDA can

play the critical catalyst role in helping the U.S.

farmer remain competitive.

As I noted earlier, what we’ve seen in the area

of biotech deregulation is a great example of

how farmers, industry, and regulators can

work together to strengthen this critical compo-

nent of the American economy. If we see more

of the same, as I suspect, that can only be a

good thing. L

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in tHE nEWs

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