Change Is Coming to Washington, D.C.

November 29, 2018

Congress has returned for a “lame duck” session. We will keep a close eye on the Hill as they work to resolve several critical issues, including seven spending bills to keep the entire government open past a December 7 deadline and possible funding of the president’s border wall. The president has stated that he is willing to force a government shutdown if he does not get adequate funding for the wall. Congress may also tackle a farm bill, a criminal justice reform bill and a newly-revealed tax extender package from the House Ways and Means Committee. We do not see major advertising initiatives as likely during the lame duck.

Nevertheless, the midterm elections will bring substantial change to Washington, D.C. Due to the elections and retirements, 104 current members of the House will not be returning next year. There will be 6 new members of the Senate.

Democrats seized control of the House with a net gain of at least 39 seats, with one race still to be determined. When the 116th Congress convenes on January 3, Congresswoman Nancy Pelosi will most likely reprise her role as Speaker, though she has faced opposition from some members of the Democratic caucus. Congressman Kevin McCarthy will become the Minority Leader.

Republicans expanded their majority in the Senate with a net gain of two seats, giving them a 53-47 advantage. However, Democrats flipped two seats in the Senate, in Arizona and Nevada. Senator Mitch McConnell will continue as Majority Leader and New York Senator Charles Schumer will continue as the Minority Leader.

Democratic control of the House means there will be a series of detailed investigations and oversight hearings on the White House and the executive branch. The Senate will continue to push forward on judicial nominations and other White House priorities. We also expect far greater focus on many of our key issues, including privacy and data security as well as on controversial product categories, including food marketing, pharmaceutical marketing and marketing to children.

There will be a large team of new committee and subcommittee chairs, who generally will be far more regulatory-oriented than their Republican predecessors. For example, the new chair of the Energy & Commerce Committee will likely be Congressman Frank Pallone from New Jersey, who has been critical of pharmaceutical advertising even though several major prescription drug companies are headquartered in the Garden State.

The chair of the Judiciary Committee most likely will be Congressman Jerry Nadler from New York, who has consistently put forward legislation to remove the tax deductibility of prescription drug advertising. DTC advertising certainly will be high on the legislative agenda as President Trump and HHS Secretary Azar are pushing a rulemaking proposal to require price disclosures in many prescription drug TV ads. We will be filing comments next month in opposition citing the serious First Amendment problems with that proposal.

An unprecedented number of women, 102, were elected to the House and this may affect some of the issue focus in 2019.

Two prominent subcommittee chairs will be Congresswoman Jan Schakowsky, a strong consumer rights activist from Illinois, and Congresswoman Anna Eshoo from California, who has been active on technology and privacy issues. Connecticut Representative Rosa DeLauro, who has been an industry critic on several issues and introduced bills to restrict the tax deductibility of foods of “low nutritional value,” will be a senior member of the Appropriations Committee. California Congresswoman Maxine Waters, a frequent target of the president, will most likely be the Chair of the Financial Services Committee.

Massachusetts Congressman Richard Neal will likely be the new Chairman of the Ways and Means Committee which writes tax legislation. This is good news for us, as Congressman Neal has been a longtime industry friend who has helped us preserve the full tax deductibility of ad costs as an ordinary and necessary business expense.

There will be very substantial turnover on the Ways and Means Committee. One-third of the committee members will not be back next year so there will be at least 12 new members. We will begin our “grass roots” meetings with these new members soon to explain the importance of advertising to the economy and their districts. With the President calling for a new middle class tax cut and the Democrats expected to take a close look at the 2017 tax bill, there may be more activity in this area next year.

While there will be less turnover in the Senate, Senators Chuck Grassley (R-IA) and Richard Durbin (D-IL), who have been severe critics of DTC advertising, will be in key positions within their parties and able to push these issues forward. Senator Grassley will be taking over as chair of the Senate Finance Committee, which has tax and health jurisdiction. There will be several new members of that committee. Senator Orrin Hatch (R-UT) is retiring and Senators Dean Heller (R-NV), Bill Nelson (D-FL) and Claire McCaskill (D-MO) lost their re-election bids.

Senator John Thune (R-SD), the Chairman of the Senate Commerce Committee, who has taken the lead in pushing privacy legislation hearings forward, will give up the chairmanship to become the Majority Whip. Senator Roger Wicker (R-MS), will take over as chair of the Commerce Committee. With the defeat of Senator Bill Nelson, the new ranking member of the Commerce Committee will be Senator Maria Cantwell (D-WA).

Tennessee Congresswoman Marsha Blackburn, chair of the Communications and Technology Subcommittee of the House Energy & Commerce Committee and the author of a very broad online privacy bill, was elected to the Senate. She also took a leading role in pushing a major data security bill in the House. We expect her to continue to push for privacy legislation in the “upper house.” Just before the election, Senator Ron Wyden (D-OR), the ranking member of the Senate Finance Committee, released an extremely detailed draft privacy bill that would give the FTC substantially enhanced enforcement powers and the ability to impose immediate major fines both for economic and non-economic injuries.

This just further demonstrates the growing focus on privacy issues on both sides of the aisle. We expect privacy and data security issues, which presently are ANA’s number one legislative priority, to be an area that gets extensive focus in both houses of the new Congress. We are working with our members and other industry groups to develop legislation that will protect the ability of marketers to collect and use consumer data in a responsible way.

The 2020 elections have already launched. The President has amassed the largest early political war chest in history with over $100 million in the bank. The Democrats have an unusually broad array of more than 20 potential presidential candidates, including several prominent members of the Senate.

There will only be a limited window for any meaningful legislation next year before the presidential and congressional campaigns overtake the full attention of the Congress.

With a divided government, the political environment is likely to get even more contentious and interesting!

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