The summary provides the following key points in 3 sentences: The House will consider several bills under suspension of the rules on Monday and Tuesday, including bills related to natural gas pipelines in national parks and the redesignation of federal aeronautical facilities. The Senate will consider an emergency supplemental appropriations bill on Monday to provide $60.4 billion in disaster aid. The House schedule for the rest of the week includes consideration of various bills related to small businesses, Medicare, defense authorization, and intercountry adoptions.

1. December 17, 2012

2. General Legislative
On Monday, December 17, the House will meet at noon for morning hour and at 2:00 for legislative
business. Votes will be postponed until 6:30 pm. Legislation considered under Suspension of the
Rules will include: H.R. 4606 – To authorize the issuance of right-of-way permits for natural gas
pipelines in Glacier National Park, and for other purposes; and S. 3193 – Barona Band of Mission
Indians Land Transfer Clarification Act of 2012. On Tuesday, December 18, the House will meet at
10:00 am for morning hour and noon for legislative business. Legislation considered under
Suspension of the Rules will include: H.R. 6612 – To redesignate the Dryden Flight Research
Center as the Neil A. Armstrong Flight Research Center and the Western Aeronautical Test Range
as the Hugh L. Dryden Aeronautical; H.R. 6016 – Government Employee Accountability Act; S.
3564 – Public Interest Declassification Board Reauthorization Act of 2012; S. 2170 – Hatch Act
Modernization Act of 2012; H.R. 6621 – To correct and improve certain provisions of the Leahy-
Smith America Invents Act and title 35, United States Code, as amended; H.R. 2471 – To amend
section 2710 of title 18, United States Code, to clarify that a video taping service provider may
obtain a consumer’s informed, written consent on an ongoing basis and that consent may be
obtained through the Internet, as amended; H.R. 6014 – Katie Sepich Enhanced DNA Collection
Act of 2012, as amended; and S. 3642 – Theft of Trade Secrets Clarification Act of 2012. On
Wednesday, December 19, and Thursday, December 20, the House will meet at 10:00 am for
morning hour and noon for legislative business. On Friday, December 21, the House will meet at
9:00 am for legislative business. Legislation under considering will include H.R. 6504 – Small
Business Investment Company Modernization Act; H.R. 1509 – Medicare Identity Theft Prevention
Act of 2011, as amended; H.R. 1845 – Medicare IVIG Access Act, as amended; Concur in the
Senate Amendment to H.R. 3783 – Countering Iran in the Western Hemisphere Act of 2012; S. 3331
– Intercountry Adoption Universal Accreditation Act of 2012; and the Conference Report on H.R.
4310 – National Defense Authorization Act for Fiscal Year 2013.
The Senate will convene on Monday, December 17, at 2:00 pm and resume consideration of H.R. 1,
the legislative vehicle for the Emergency Supplemental Appropriations Bill.
Fiscal Cliff
President Obama and Speaker Boehner continue to remain divided on any fiscal cliff deal despite
ongoing conversations. On Monday night, the Administration issued its long-awaited first counteroffer,
which included $1.4 trillion in revenue increases, down from the President’s original $1.6 trillion offer. On
spending reductions, the Administration’s proposal was essentially unchanged. The offer also included
stimulus spending and an increase in the U.S.’s borrowing limit, both of which were part of the
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3. Administration’s original proposal. In short, the only difference between the original proposal and the
Administration’s updated counteroffer is the $200 billion reduction in additional revenues requested.
Under the President’s original proposal, per Administration officials, $1.6 trillion of net tax increases would
occur in two steps: (1) the first trillion up front by virtue of allowing upper-income Bush tax cuts to expire
on earned and investment income, along with changes to the estate tax, with (2) the remainder to be
raised in a tax reform process to be completed by August 1, 2013. The President’s counteroffer adjusts
the second part of this two-step equation, where only approximately $400 billion would be generated
through tax reform, rather than the original proposal of $600 billion.
In response to the President’s counteroffer, the Speaker countered immediately with essentially the
Republicans original proposal. Under that proposal, the Republicans offered $2.2 trillion in new revenues
and spending cuts – roughly $500 billion more in spending reductions than the amount proposed by the
President. House Republicans reach the $2.2 trillion figure through: (i) $800 billion in new revenues in the
course of 2013 tax reform; (ii) $300 billion in discretionary savings; (iii) $600 billion in savings from
healthcare programs; (iv) $300 billion from other mandatory spending; and (v) $200 billion through
revisions to the Consumer Price Index (CPI) inflation calculation method, providing for a chained-CPI.
Over the weekend, Speaker Boehner proposed allowing tax rates to expire for those with annual incomes
of $1 million or more, but continued to insist on the entitlement cuts contained in the Republicans’ offer.
As meetings continue, additional options have begun to emerge. One option, commonly referred to as
“Plan B,” would include a Republican agreement to allow the top rates to expire on the top 2 percent by
passing a bill that would look similar to the Senate passed Middle Class Tax Cut bill, S. 3412, that
extended rates for the middle class and included a one year AMT patch. S. 3412, which passed by a 51-
48 vote, would also extend through 2013 dividend and capital gains rates for joint filers earning less than
$250,000, but increases the capital gains rate to 20 percent for those earning above that amount. S.
3412 would further extend through 2013 (1) the American Opportunity tax credit; (2) the increase in the
refundable portion of the child tax credit; (3) the increased earned income tax credit percentage for three
or more qualifying children; and (4) disregards tax credits and refunds in determining eligibility for federal
and federally assisted programs (for example, means tested programs). It extends to taxable year 2013 a
$250,000 expensing allowance for depreciable business assets and increases to $800,000 the threshold
for a phase-out of the amount of such expensing allowance.
The Plan B approach would produce, according to reports, approximately $440 billion in additional tax
revenue. Items that could be added to this bill to make it more palatable are business tax extenders,
estate tax extension, a delay to the automatic defense cuts, an extension for unemployment insurance
benefits, and inclusion of the so called “Doc fix,” which includes means adjusting the sustainable growth
rate (SGR) formula for Medicare to keep provider payments stable so that doctors do not flee Medicare.
If House Republicans were to pass such legislation, the President and Senate Democrats would be left
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4. with a choice to either accept this version, without a debt ceiling increase, or allow all rates to increase on
January 1.
The President has been adamant that any deal also include an increase in the debt ceiling, but
Republicans have refused to include this in the discussion. By leaving the increase in the debt ceiling to
another day, it provides the Republicans with more leverage on entitlement reform.
House staff has been alerted that a weekend session is possible next week, hinting that a vote on a fiscal
cliff deal could be near. Although staff have been advised of a potential weekend vote, it may be difficult
for one to occur next week as there is just too little time to piece together the minutiae of a deal in time for
next weekend – in which case, a vote on any deal could be delayed until the week between Christmas
and New Year’s Day.
Agriculture & Food
LEGISLATIVE ACTIVITY
 Farm Bill. Last week, negotiations between the Senate and House Agriculture leadership to include a
five-year Farm Bill in a deficit-reduction package remained at a stalemate. Significant differences still
remain, as discussions continued to focus on the commodity title, particularly on setting target prices
and placing limits on subsidies.
On Thursday, December 13, a bipartisan group of 33 Senators (24 Democrats and 9 Republicans)
sent a letter to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-
KY) urging them to include the Farm Bill in a fiscal cliff agreement, if such an agreement passed by
the end of the year. Notably absent from the group were Senate Agriculture Committee Chairwoman
Debbie Stabenow (D-MI) and Ranking Member Pat Roberts (R-KS), as well as Senators from
southern states.
Budget, Appropriations
LEGISLATIVE ACTIVITY
 Supplemental Appropriations for Disaster Aid. Today the Senate will begin consideration of a
$60.4 billion emergency disaster appropriations bill (as revenue bills must originate in the House,
Senate Majority Leader Harry Reid (D-NV) will substitute a House-passed appropriations measure
(H.R. 1) with the recovery package). With 60 votes needed to advance the legislation, Senate
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5. Democratic leaders are working to solicit Republican support. Although the demand for spending
offsets is waning, Republicans would prefer to scale back the size and scope of the bill, particularly
with regard to the funding proposed for mitigation-related efforts and funding which would be spent
beyond the FY 2013 budget year.
Cybersecurity
LEGISLATIVE ACTIVITY
 Cybersecurity Legislation. Incoming House Homeland Security Committee Chairman Michael
McCaul (R-TX) and Senate Homeland Security and Governmental Affairs Committee Chairman Tom
Carper (D-DE) met last week to discuss cybersecurity legislation in the next Congress. Rep. McCaul
also met with Department of Homeland Security Secretary Janet Napolitano to discuss a long list of
issues but he noted that cybersecurity was one of the priorities of the meeting. It is expected that both
Rep. McCaul and Senator Carper will introduce cybersecurity legislation in the first few months of
2013. Congressional Cybersecurity Caucus Chairman Jim Langevin (D-RI) has also expressed his
intent to introduce cybersecurity legislation next year that would give the Executive Branch more
power to regulate information technology security standards for critical infrastructure providers.
EXECUTIVE BRANCH ACTIVITY
 Executive Order: We expect that the White House will issue an Executive Order (EO) related to
cybersecurity issues in the near future given the lack of movement on cybersecurity legislation in the
Congress during the lame duck. House Cybersecurity Task Force leader Rep. Mac Thornberry (R-
TX) stated last week that an EO cannot adequately address all of the cyber risks that currently exist
and cooperation between the Executive Branch and Congress on cybersecurity legislation next year
will be necessary.
OTHER NEWS
 A new McAfee Labs report released last week warns that cyber hackers may stage a massive attack
on 30 or more U.S. national, investment, and regional banks in the coming year. A Russia-based
hacker group is likely behind the cyber threat and has already stolen $5 million in the past few
months. It is expected that these attacks will continue as the hackers have increasingly targeted U.S.
banks. The report encourages the financial industry to be wary of software that creates fraudulent
online banking transactions.
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6. Education
REGULATORY ACTIVITY
 Pay as You Earn. Last week, the Department of Education announced an earlier implementation
date for the Direct Loan program regulation establishing a new income-based student loan repayment
program, titled “Pay as You Earn.” The program is aimed at assisting borrowers who have a high
student debt-to-income ratio. The current program caps monthly loan payments of qualified student
loan borrowers at 15 percent of their discretionary income and forgives the remaining balance after
25 years. Under the new program, the monthly cap is set at 10 percent and the remaining balance is
forgiven after 20 years. Originally, the program was scheduled to take effect in 2014.
Energy
LEGISLATIVE ACTIVITY
 Energy Taxes. In a letter addressed to congressional leaders, the American Wind Energy
Association has proposed extending and phasing-out the wind production tax credit beyond 2012, in
an effort both to bolster chances for a short-term extension by year-end and in comprehensive tax
reform discussions next year. (Taxpayers can now claim a 2.2 cent/kilowatt-hour income tax credit for
wind energy produced from a qualifying facility placed in service by December 31, 2012.) The AWEA
proposal would extend the tax credit for projects that commence construction in 2013 (the Senate
Finance Committee noted that this modification would cost $12.184 billion); the tax would then begin
to be phased down to 90 percent for projects placed in service in 2014; 80 percent in 2015; 70
percent in 2016; and 60 percent in 2017 and 2018 – ending in 2019.
 Energy Committees. Two newly-elected Democrats are slated to join the Senate Energy and Natural
th
Resources Committee in the 113 Congress: Senators-elect Martin Heinrich (NM) and Mazie Hirono
(HI). In the House, three Democrats are slated to return to the Energy and Commerce Committee,
plus two new members will join: Congressmen Jerry McNerney (CA), Bruce Braley (IA), and Peter
Welch (VT) will return; second-term Congressmen Ben Ray Luján (NM) and Paul Tonko (NY) will join.
REGULATORY ACTIVITY
 FERC Conference. The Federal Energy Regulatory Commission will hold a February 13 technical
conference to identify areas in which additional guidance or regulatory changes could be considered
regarding information sharing and communications issues between natural gas and electric power
industry entities. There will be a free webcast of the conference.
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7.  Hydraulic Fracturing. The Bureau of Land Management is expected to delay finalizing proposed
rules to regulate the practice on federal lands into next year in order to review the 170,000 comments
received.
 Offshore Wind. Submission of nominations for commercial wind lease projects offshore North
Carolina must be postmarked to the Bureau of Ocean Energy Management by January 28. In
consultation with other federal agencies and the North Carolina Intergovernmental Renewable Energy
Task Force, BOEM has identified three areas totaling 1,441 square nautical miles under
consideration for potential future wind energy leasing. One area is located offshore Kitty Hawk, the
other two areas are located offshore southern Wilmington.
 Power Plants. The Environmental Protection Agency has extended the comment period by one
week, to January 7, for the proposed rule, “Reconsideration of Certain New Source and
Startup/Shutdown Issues: National Emission Standards for Hazardous Air Pollutants from Coal- and
Oil-fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired
Electric Utility, Industrial-Commercial-Institutional, and Small Industrial-Commercial-Institutional
Steam Generating Units.”
 Keystone XL Pipeline. The Nebraska Department of Environmental Quality is expected to submit its
recommendation to Governor Dave Heineman within the next few weeks. State law provides the
governor with the power to accept or reject a proposed alternative route for the pipeline through
Nebraska that avoids the sensitive Sand Hills. The U.S. State Department delayed making a
recommendation to President Obama earlier this year after the State raised environmental concerns.
His decision is expected early next year.
Environment
REGULATORY ACTIVITY
 EPA Releases New Recreational Water Quality Criteria. Pursuant to an order from a U.S. District
Court and required by the Beaches Environmental Assessment and Coastal Health Act of 2000, the
U.S. Environmental Protection Agency (EPA) has recommended new recreational water quality
criteria for states. EPA last issued ambient water quality criteria recommendations for recreational
waters in 1986. The new criteria use a broader definition of illness. In addition, EPA narrowed from 90
days to 30 days the time period over which the results of monitoring samples may be averaged. The
2012 Recreational Water Quality Criteria (RWQC) puts forth two sets of numeric concentration
thresholds and consists of three components: magnitude, duration and frequency. The
recommendations also include:
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8. • A short-term and long-term measure of bacteria levels that must be used together to ensure that
water quality is properly evaluated.
• Stronger recommendations for coastal water quality, similar to those for fresh water.
• A rapid testing method to determine if water quality is safe within hours of water samples being
taken.
• An early-alert approach for states to use to issue swimming advisories for the public.
More information about the new criteria can be accessed here:
http://water.epa.gov/scitech/swguidance/standards/criteria/health/recreation/index.cfm
 U.S. Off-Shore Wind Advancing. The U.S. Department of Energy (DOE) has announced seven
offshore wind projects in Maine, New Jersey, Ohio, Oregon, Texas, and Virginia for installation in
state and federal waters intended for commercial operation by 2017. Each project will receive up to
$4 million to complete the engineering, design, and permitting phase. The DOE will select up to three
of these projects for follow-on phases that focus on siting, construction. These projects will receive up
to $47 million each over four years, subject to Congressional appropriations. A map displaying the
announced wind projects can be accessed here: http://energy.gov/maps/accelerating-offshore-wind-
development. In addition to the above projects, the U.S. Department of Interior, Bureau of Ocean
Energy Management (BOEM), has issued a notice of intent to prepare an Environmental Assessment
(EA) for commercial wind leasing and site assessment activities on the Atlantic Outer Continental
Shelf (OCS) for offshore North Carolina.
Financial Services
LEGISLATIVE ACTIVITY
 New Republicans to Join House Financial Services Committee. Congressman Jeb Hensarling
(R-TX), who will become Chairman of the House Financial Services Committee, announced eight
Republicans will join the Committee next Congress. The Members include Rep.-elect Andy Barr
(KY), Rep.-elect Tom Cotton (AR), Randy Hultgren (IL), Mick Mulvaney (SC), Rep.-elect Robert
Pittenger (NC), Dennis Ross (FL), Marlin Stutzman (IN) and Rep.-elect Ann Wagner (MO).
 Next Week’s Senate Banking Committee Hearings. On Tuesday, December 18, the Senate
Banking Subcommittee on Securities, Insurance, and Investment will hold a hearing titled
“Computerized Trading Venues: What Should the Rules of the Road Be?” Witnesses will include
Lawrence Leibowitz, NYSE Euronext; Dan Mathisson, Credit Suisse; Eric Noll, NASDAQ OMX; and
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9. Robert Gasser, ITG. On Wednesday, December 19, the Senate Banking Subcommittee on Financial
Institutions and Consumer Protection will hold a hearing titled “Making Sense of Consumer Credit
Reports.” Witnesses will include Consumer Financial Protection Assistant Director for the Office of
Deposits, Cash, Collections, and Reporting Markets Corey Stone, Stuart Pratt of the Consumer Data
Industry Association, and Chi Chi Wu of the National Consumer Law Center.
REGULATORY ACTIVITY
 Federal Reserve Proposes Rules for Large Foreign Banks. On Friday, December 14, the Federal
Reserve published for comment proposed rules that would impose enhanced prudential standards
required by the Dodd-Frank Act for foreign banking organizations and foreign nonbank financial
companies supervised by the Federal Reserve. The enhanced prudential standards include risk-
based capital and leverage requirements, liquidity standards, risk management and risk committee
requirements, single-counterparty credit limits, stress test requirements, and a debt-to equity limit for
companies that the Financial Stability Oversight Council has determined pose a grave threat to
financial stability. Comments should be received on or before March 31, 2013.
 Treasury Announces Sale of Remaining AIG Common Stock. On Friday, December 14 the
Treasury Department announced it received payment from its final sale of AIG common stock. On
Tuesday, December 11, the Treasury Department agreed to sell its remaining 234 million shares of
AIG common stock at $32.50 per share. In total, the Treasury and the Federal Reserve fully
recovered the combined $182.3 billion committed to AIG during the financial crisis, resulting in a
$22.7 billion positive return. Treasury still holds warrants to purchase approximately 2.7 million shares
of AIG common stock.
 CFTC Wins DC Federal Court Challenge to CPO Rules. On December 12, the U.S. District Court
for the District of Columbia ruled in favor of the Commodity Futures Trading Commission (CFTC) and
against the Investment Company Institute (ICI) and the U.S. Chamber of Commerce, holding that the
CFTC’s new rules rescinding certain commodity pool operator (CPO) registration and reporting
exclusions neither were done in an arbitrary and capricious manner nor did the CFTC fail to comply
with the Commodity Exchange Act’s (CEA) cost-benefit analysis requirements. This decision marks
the CFTC’s successful defense of one of its final rules criticized for a deficient cost-benefit analysis
and Administrative Procedure Act (APA) violations.
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10. Health Care
LEGISLATIVE ACTIVITY
 Doc Fix Plan B. In the event President Obama and Congress fail to make a deal to address the
fiscal cliff, House Energy and Commerce Committee Chairman Fred Upton (R-MI) has a "plan b" to
avert a scheduled 27 percent cut to physician payments under Medicare. Committee staff have
prepared a standalone package to extend current physician payments for one year; the package also
includes a number of other "Medicare extenders" and will cost $30 billion.
 Finance Confirmation Hearing. The Senate Finance Committee will hold a December 20
confirmation hearing for William B. Schultz to be general counsel of the Department of Health and
Human Services (HHS).
REGULATORY ACTIVITY
 Regs Under Review. The Medicaid Eligibility Changes under ACA Proposed Rule is under review at
the Office of Management and Budget (OMB).
OTHER HEALTH NEWS
 MedPAC Meeting. The Medicare Payment Advisory Commission (MedPAC) has scheduled a public
meeting on January 10-11, 2012. An agenda will be released in advance of the meeting.
 GAO EHR Report. The Government Accountability Office (GAO) released a report this week on
electronic health records and the number and characteristics of providers awarded Medicaid Incentive
Payments for 2011. Participation rates, as well as total payments, were higher for hospitals in the
Medicaid EHR program when compared to the Medicare EHR program, though the median payment
amount in the Medicaid EHR program was less than half as large. About 50 percent of hospitals
accounted for about 80 percent of the total amount of Medicaid incentive payments awarded to
hospitals. Proportionally more than three times as many eligible professionals participated in the
Medicaid EHR program in 2011 than in the Medicare EHR program, though the total payment
amounts in the two programs were nearly equivalent.
 IOM Meeting. The Institute of Medicine's (IOM) Committee on the Governance and Financing of
Graduate Medical Education (GME) will hold a public meeting on December 19-20, 2012.The
Committee is charged with an independent review of the governance and financing of GME, and will
develop a report with recommendations for policies to improve graduate medical education, with an
emphasis on the training of physicians.
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11. International, Defense, Homeland Security
LEGISLATIVE ACTIVITY
 Senate Foreign Relations Committee (SFRC) Developments. As President Obama reportedly
moves closer to nominating SFRC Chairman John Kerry (D-MA) as Secretary of State, Senator Bob
Menendez (D-NJ) stands ready to assume the Committee Chairmanship if Senator Kerry departs.
Senator Menendez is a vocal champion of President Obama’s policy priorities on most issues.
However, the Senator’s differences with the Administration on certain first-tier foreign policy concerns,
notably his more unilateralist tendencies on Iran and Cuba sanctions issues, have served as a key, if
underreported, reason behind the President’s alleged initial preference for nominating UN
Ambassador Susan Rice over Senator Kerry. Senator Menendez also possesses a more combative
political style than Senator Kerry, which could lead to some fireworks not only with the White House
and Foggy Bottom, but certainly also with relatively mild-mannered incoming SFRC Ranking Member
Bob Corker (R-TN). Meanwhile, Senator Corker will face his share of intra-Committee challenges on
the Republican side, as the intervention-wary Tennessean will differ publicly on some issues with
other SFRC Members with more neo-conservative foreign policy tendencies, including Senator Marco
Rubio (R-FL) and a likely Committee newcomer, Senator John McCain (R-AZ). Among Democratic
SFRC newcomers, Senator-elect Tim Kaine (D-VA) likely will devote significant attention to Latin
American issues, building on his earlier work as a missionary in Honduras. Senator-elect Chris
Murphy (D-CT) brings foreign policy experience to the Committee from his previous service on the
House Foreign Affairs Committee. Meanwhile, before any of those SFRC roster changes occur,
Secretary of State Clinton is tentatively scheduled to testify in front of the Committee on the Benghazi
attack on Thursday.
 House Foreign Affairs Committee (HFAC) Developments. Secretary Clinton also is tentatively
slated to appear before HFAC on Benghazi on Thursday. The State Department may yet aim to push
back both hearings, though. In other news, incoming HFAC Chairman Ed Royce (R-CA) has taken
pains recently to show there is no daylight between him and outgoing Chair Ileana Ros-Lehtinen (R-
FL) on key issues, criticizing Administration efforts to modify Iran sanctions provisions in the pending
defense authorization bill, lambasting North Korea for its ballistic missile launch this week, and
questioning what he deems “President Morsi’s power grab” in Egypt.
 Senate Intelligence Committee Developments. Following the closed-door 9-6 vote by the members
of the Senate Select Committee on Intelligence to approve the classified Majority staff report on the
Central Intelligence Agency’s (CIA’s) interrogation techniques during the Bush Administration, the
Obama Administration, including the CIA itself, now will have the chance to comment in response.
Senators also will engage in ongoing debate whether to declassify the report. Committee Chair
Dianne Feinstein (D-CA), fellow Committee Democrats, and non-Committee Member John McCain
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12. (R-AZ) favor declassification. Most Committee Republicans, including Vice Chair Saxby Chambliss
(R-GA), are staunchly opposed, in part because of complaints about the report’s interviewing and
fact-checking methodology. Meanwhile, Senator-elect Angus King (I-ME) and Senator-elect Martin
Heinrich (D-NM) will join the Committee in the next Congress.
 Senate and House Armed Services Committee (SASC and HASC) Developments. Look for
senior SASC and HASC Members to conclude their Conference Committee on the Fiscal Year 2013
National Defense Authorization Act next week, despite several lingering differences between the
Senate- and House-passed versions of the annual defense authorization bill. Also of note, Hampton
Roads, VA’s naval facilities and Wright-Patterson Air Force Base in Dayton, OH emerged as big
winners when the HASC’s Subcommittee Chairs were announced on Thursday. Congressman Mike
Turner (R-OH), a former mayor of Dayton, will chair the Tactical Air and Land Forces Subcommittee.
Congressman Turner has been a highly active HASC Member, particularly on missile defense issues
as the outgoing Chair of the Strategic Forces Subcommittee. Eastern Virginia Republicans Randy
Forbes and Rob Wittman will serve as the Chairs of the Seapower and Projection Forces and
Readiness Subcommittees, respectively. Senator-elect Kaine’s position on the SASC, replacing
outgoing Senator Jim Webb (D-VA), also will prove vital for the Tidewater region’s ship-building
industry and military facilities. Senator-elect King, Senator-elect Joe Donnelly (D-IN), and Senator Bill
Nelson (D-FL) also will join the Committee next year.
REGULATORY ACTIVITY
 Personnel Decisions. In addition to President Obama’s upcoming announcements on his nominees
to be Secretary of State and Secretary of Defense, where informed speculation is coalescing around
Senator Kerry and former Senator Chuck Hagel (R-NE), respectively, the President also will decide
on his second-term CIA Director in the coming weeks. All of the supposedly leading candidates for
the CIA Director position come with complications. The Senate Intelligence Committee’s Majority
staff report on Bush-era CIA interrogation techniques, mentioned above, may well lead President
Obama to steer clear of naming Acting Director Michael Morrell or White House Counterterrorism
Advisor John Brennan, despite the President’s close working relationship with both men. Moreover,
Brennan does not appear to want the job. Under Secretary of Defense for Intelligence Michael
Vickers is a well-regarded, longtime intelligence figure. However, the Pentagon’s recently-announced
desire to expand its clandestine service could complicate Under Secretary Vickers’s chances. The
Department of Defense proposal, with which Vickers was intimately involved, is unpopular at Langley
and among key Senate and House Members involved in Intelligence Community issues. Finally,
former Congresswoman Jane Harman (D-CA), a former House Intelligence Committee Member and
current Director of the Woodrow Wilson Center, is an intelligence expert and a centrist with support
on both sides of the aisle. However, Representative Harman and House Minority Leader Nancy
Pelosi (D-CA) are not close. Plus, the President may wish to refrain from adding another former
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13. Member of Congress to an Administration national security team that may soon include Senator Kerry
and Senator Hagel, in addition to Vice President Biden and himself.
Tax
LEGISLATIVE ACTIVITY
 Obama and Boehner Hold Series of Talks. President Obama and Speaker Boehner met in a
series of talks this week. The President extended a counteroffer early in the week, followed by later
meetings that resulted in some progress being made (i.e., the President Requested less revenues
through tax reform and the Speaker offered a rate increase on those earnings over $1 million).
Please see the Fiscal Cliff section above, for more detailed coverage of this topic.
 Tax Hearings Next Week. There are no relevant tax hearings scheduled for next week.
Transportation
LEGISLATIVE ACTIVITY
 Hurricane Sandy Supplemental Appropriations Legislation. The Senate is expected to consider
emergency supplemental appropriations legislation for Hurricane Sandy next week, potentially as
early as Monday. Last week, Senate Appropriations Chairman Daniel Inouye (D-HI) released a $60.4
billion appropriations measure largely tracking President Obama’s supplemental appropriations
request. The bill includes $921 million for FHWA emergency relief; $336 million for grants to Amtrak;
and $10.7 billion for FTA’s newly authorized Public Transportation Emergency Relief program, of
which $5.4 billion may be transferred for eligible highway or transit projects to mitigate the impacts of
future disasters in areas impacted by Hurricane Sandy. Republican support for the measure as
drafted remains unclear as there is opposition to using emergency spending for long-term prevention
and mitigation projects.
 Infrastructure Funding and the Grand Bargain. This week, negotiations over the “fiscal cliff” will
continue. As previously noted, the Administration’s initial proposal included the $50 billion in upfront
infrastructure investment that President Obama has been pushing since 2010. Republicans have
continued to reject the idea of a deal that would include additional spending. Outgoing House
Transportation and Infrastructure Chairman John Mica (R-FL) and others have also firmly indicated
that they do not see the fiscal cliff negotiations addressing the gas tax or transportation revenue.
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