Legislative Updates: October 2013
In a Congressional office, what is considered "essential?" Is it essential to answer constituent correspondence? What about holding oversight hearings? On October 1, 2013, this stopped being a rhetorical question. During the 16-day-long government shutdown it was up to every individual Congressional office to decide who on their staff was "essential," and the Members' responses varied wildly. Some declared every single staff member to be essential. Other Members furloughed most of their staff and even answered the phones themselves.
The effect on the many legislative bodies who deal with the financial industry was mixed. Some committees, such as the Senate Banking Committee, continued to hold hearings and do as much work as they could with limited staff. Other committees, such as the House Financial Services Committee, were working with a skeleton crew and canceled all hearings until the shutdown was over. Both committees working on tax reform, the House Ways and Means and Senate Finance Committee, had much of their staff furloughed.
While the Fed is independently funded and was not impacted by the shutdown, The Securities and Exchange Commission (SEC) and The Commodity Futures Trading Commission (CFTC) were directly affected. According to press reports, the enforcement, market oversight and surveillance departments of the CFTC "largely ceased" operations, with fewer than 30 of the more than 600 total agency employees deemed essential; for example, only eight employees remained in the entire enforcement division. The CFTC has no funding flexibility and had to wait until the shutdown ended until it could operate again.
The SEC, on the other hand, had been able to continue operating since the shutdown by using its carryover balances, which would have allowed the agency to remain open for "a few weeks," according to an SEC spokesman. If the agency had run out of money, essential employees would still have kept an eye on exchange activity, potential insider-trading and money funds, but other operations, such as processing IPO applications like Twitter's, would have ceased.
The U.S. Securities Markets Coalition regularly interacts with the supportive Ways and Means Members and their staffs. Prior to the shutdown they had met with the staffs of several members of the House Committee on Financial Services, including Reps. Robert Hurt (R-Virginia), Randy Hultgren (R-Illinois) and Michael Grimm (R-New York). The meetings were part of the Coalition's continuing effort to educate Congressional offices about our concerns with the tax reform draft legislation.
House Ways and Means Committee Chairman Dave Camp (R-Michigan) insisted on September 9 that "We're definitely going to step up the pace this fall, no doubt about it" on tax reform, but instead was forced to deal with the 16-day halt. He was reported as deferring to his party's leadership on the larger issues of defunding Obamacare and raising the debt ceiling while still trying to keep the members as engaged as possible on the tax reform bill. Despite his efforts, Congress has of its own volition lost time that cannot be replaced.
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