Bet on Clinton

Obama agencies bet on Clinton win

Some important executive actions won't be finished before Obama leaves office, but that won't matter if Trump loses in November.

By Andrew Restuccia

The Obama administration is seemingly so confident of a Hillary Clinton victory in November that it’s pumping out rules and other executive actions that won’t be completed until the next president takes office on politically sensitive issues like climate change and student loans.

That means they’re leaving these pieces of Barack Obama’s legacy at the potential mercy of a President Donald Trump.

Proposals on the chopping block under a Trump administration could include still-unfinished efforts to strengthen Obamacare and Medicare, crack down on the oil and gas industry’s contributions to climate change and make it harder for corporations with foreign affiliates to lower their U.S. tax bills — all of which would help Obama meet promises he made in 2008. Also at risk would be an initiative to forgive federal student loans for borrowers who have been defrauded by colleges, plus a long-term push to reduce salt in Americans’ diet.

Most presidents push eleventh-hour initiatives, of course, and Obama’s administration made sure its most crucial efforts would be wrapped up well before he leaves office. But many experts see this White House moving especially aggressively in its final months and showing every sign it expects to hand off these executive actions to Clinton.

“Yes, definitely there is confidence in Clinton and the baton-handing,” said Heather Zichal, an informal Clinton campaign adviser who helped shape Obama’s climate change agenda as a top White House aide. “It’s ultimately helpful to her to start these processes so she can hit the ground running.”

A Trump presidency would not only derail incomplete Obama initiatives — it would seek to blow up eight years of administration actions on everything from health care to taxation to climate regulations. Trump has scoffed at climate change as a “hoax” that benefits China. He’s pledged to repeal Obamacare, not strengthen it. And he’s promised to dismantle the Dodd-Frank Wall Street reform law.

But for Trump, the regulations left unfinished by Jan. 20 would provide the fattest targets to begin unraveling Obama’s handiwork.

“Given the rebuke a Hillary Clinton loss would be to Obamas legacy, there is every expectation that a Trump-Pence administration would use every tool at their disposal to freeze regulatory action set in motion by the Obama administration,” said Dan Holler, a spokesman for Heritage Action, a conservative advocacy group.

Most of the rules now in the works would dovetail with Clinton’s promises to build onObama’'s achievements in realms like climate change and health care.

“The effort you are seeing from the president and his team will help ensure when Secretary Clinton enters the Oval Office, she and her team will have a running start when it comes to advancing climate and energy issues,” said Tom Reynolds, a former White House climate aide who stepped down in April.

An Office of Management and Budget spokesperson said the regulatory efforts are “in line with previous administrations in the leadup to a transition.”

“Work will continue through the end of the administration to advance and finalize rules and regulations in line with agency regulatory agendas, last released in May of this year,” the spokesperson said.

Some of these initiatives come with stiff price tags: It’s almost certain that the administration’s final six months will see an increase in economically significant rules with an estimated annual price tag of at least $100 million, according to a recent report by the George Washington University Regulatory Studies Center. And many face strong GOP opposition. For example, Republicans have charged that the Education Department’s proposal to forgive some federal student loans would cripple schools, and they’ve balked at the billions of dollars it would cost taxpayers.

All the regulations, the sweeping and incremental ones alike, are landing in a perilous stretch of the political calendar — late enough in Obama's term that Trump and a GOP-led Congress could block them from taking effect.

Of course, the Obama administration, like its most recent predecessors, has taken pains to complete its highest-profile rules well before the president leaves office — from last year’s Environmental Protection Agency limits on power plants’ greenhouse gases to a Labor Department rule in mid-May extending overtime pay to more than 4 million people. Both were executed without congressional input.

Howard Shelanski, who heads the White House's Office of Information and Regulatory Affairs, urged agencies in a December memo to “strive to complete their highest priority rulemakings by the summer of 2016 to avoid an end-of-year scramble.”

But the crucial political deadline for eleventh-hour rules has already come and gone: Any regulation finished after approximately May 23 is vulnerable to being thwarted by a 1996 law called the Congressional Review Act, which gives lawmakers a path to block final regulations.

Such realities have weighed on late-term administrations since 2001, when newly sworn-in President George W. Bush used that process to kill a Bill Clinton administration rule aimed at reducing repetitive-motion injuries in the workplace. Hence, the flurry in regulatory action earlier this year, when the Obama administration finished rules on subjects such as silica dust, e-cigarettes and financial advisers.

Susan Dudley, who headed the Office of Information and Regulatory Affairs at the end of the George W. Bush administration, said she worked hard to avoid an onslaught of midnight regulations back then, warning agencies to finish rules early. But in the end, no amount of preparation could prevent a rush of end-of-term rules.

“I said, ‘We’re going to be relaxing and we’re going to be enjoying the holidays.’ We laughed about that because that was not the case,” she said in an interview.

Whether Clinton is elected or not, Dudley said pressure to shore up Obama’s legacy and a desire by agency officials to finish up their work will likely lead to a fourth-quarter push to get as much done as possible.
“A president’s term is four or eight years and it’s every month of those four or eight years, so you can’t expect agencies to stop working in June,” she said.

Rena Steinzor, a law professor at the University of Maryland and former president of the Center for Progressive Reform who has tracked regulations for decades, said the Obama administration has been remarkably “disciplined” about finishing regulations before leaving office. While it is laying the groundwork for new regulations, it has largely delivered on its priorities, she said.

But Steinzor noted that a Clinton win would allow for policy continuity that has never been seen in modern Democratic politics.

Depending on how long she serves, “Clinton would be potentially the 12th and 16th years of a Democrat, which hasn’t happened in a long time,” she said. In fact, Democrats haven’t occupied the White House for such an extended run since Franklin D. Roosevelt and Harry Truman.

Now that the administration has largely finished the core components of Obama’s climate agenda, for instance, it is plotting ways to continue the momentum.

The Environmental Protection Agency has taken early steps toward reducing methane pollution from existing oil and gas facilities, a move that could grease the skids for a Clinton administration to propose and finish rules to slash the powerful greenhouse gas. Environmentalists and many experts want Clinton to move on this quickly, saying that cutting methane from the oil and gas sector is essential to tackle climate change.

EPA is also taking preliminary steps that could lay the groundwork for a future crackdown on airline emissions, and it is kick-starting a review of vehicle fuel economy standards. Both issues will land in the lap of the next administration.

Meanwhile, the Interior Department placed a moratorium earlier this year on new coal leases on federal lands, launching a multi-year review the next president will have to complete — and Obama’s supporters are banking on it being Clinton.

On health care, the administration's No. 1 health care priority is bolstering the Affordable Care Act’s state marketplaces, where signs indicate that premiums will likely spike again next year and some insurers are struggling to make a profit. Both trends pose a significant threat to Obamacare.

Federal health officials are expected to propose a major regulation by this fall — probably by early November — that would outline policy changes in 2018 on how insurers selling coverage on the exchanges are paid to take on expensive patients. The proposal is already under review by the White House, but officials may have to rely on the next administration to finish it. The Department of Health and Human Services has already tried to boost the exchanges by cracking down on short-term insurance plans and making it harder for people to sign up for coverage outside the regular enrollment period.

The administration is also pushing on broader initiatives to change how health care is paid for.

Before the end of the year, HHS is expected to wrap up a major change in how Medicare pays physicians, part of its effort to steer the health care system to pay for quality. The agency has set a goal for 2018 of tying half of all Medicare payments to such models.

The administration’s timeline “has put a lot of pressure” on federal regulators “to move to these models, whether they’ve been well-tested or not,” said the Urban Institute’s Bob Berenson, a top health official during the transition between Bill Clinton and George W. Bush.

“The most important thing to do is to continue on the path of what I call ‘putting points on the board,’ adding to the substantive success,” HHS Secretary Sylvia Mathews Burwell said in a recent POLITICO interview, when asked whether she worries about Trump’s threats to kill Obamacare.

Several individuals who worked on health issues in the Obama or Bill Clinton administrations said a transition from Obama to Hillary Clinton would be ideal — not just because they align so well politically but because they both have ties to many of the same people in Democratic health circles.

“I think the transition will be easier than any of the transitions we’ve seen in the last 20 years,” one former official said.

The administration is also leaning on the Food and Drug Administration to further its aggressive push for healthier eating.

In June, the FDA released voluntary but highly controversial goals for reducing sodium in foods ranging from cereal to chicken wings and salad dressing. The move kicked off what is expected to be a more than decadelong process, one that health advocates expect would be continued by a Clinton administration.

Clinton hasn’t exactly made sodium reduction a campaign talking point, but she is expected to stay the course.

Bill Clinton, who radically changed his own diet after having quadruple bypass surgery, has been particularly active in the Alliance for a Healthier Generation. The Alliance, founded by the Clinton Foundation and the American Heart Association, helped persuade the beverage industry to take full-calorie soda out of schools and got McDonald’s to swap milk for soda in Happy Meals, among other changes.

Still, Washington insiders don’t expect a Clinton White House to be as aggressive on the nutrition front as the Obama administration has been.

“The question is really whether either the Trumps or the Clintons are going to be as passionate about the obesity space as the first lady and President Obama have been,” said Sean McBride, founder of DSM Strategic Communications, which advises food companies. “Since the first lady herself has driven a lot of the activity for this administration, it would be hard to match that.

But McBride said he expects the nutrition policies started by this administration to inch forward. “The activity will certainly continue,” he said. “It will just not continue at the same pace.”

The most consequential, and controversial, tax regulation awaiting completion would curb corporate inversions — a tactic that companies use to cut their taxes by reincorporating in a foreign country with lower tax rates than the U.S., usually by merging with a foreign company.

The Treasury Department proposed the rules in April. They would target “earnings stripping,” which involves loading up a U.S. subsidiary with tax-deductible debt while shifting profits to the lower-tax country.

Businesses argue that one of the rules in particular would interfere with transactions that have nothing to do with inversions and that ensuring compliance would be an accounting nightmare. Lawmakers in both parties have expressed similar concerns, and Treasury officials have said they are willing to loosen some of the restrictions.

Most tax lawyers think the rules will be completed by October at the earliest. But given how unexpected the proposal was in the first place, the timing isn't a sure thing.