The Democrats' Playbook for Business

President Bush and Democratic leaders may be making nice on Capitol Hill, but their agendas differ greatly. Here's how it could play out

by Richard S. Dunham

The new era of Washington bipartisanship is off to an unusually warm and fuzzy start, with President Bush inviting triumphant Democratic congressional leaders to the Oval Office for pasta salad and happy talk. "There is a great opportunity for us to show the country that…we can work together," Bush said on Nov. 10 after meeting with Senate Democratic Leader Harry Reid of Nevada and Democratic Whip Dick Durbin of Illinois.

"The election is over," echoed Reid. "The only way to move forward is with bipartisanship and openness, and to get some results."

That couldn't come soon enough to Americans angered by gridlock and hyper-partisanship on Capitol Hill. But the Democratic Congress and the Republican President have widely divergent agendas, from economics to foreign policy, and it's easier to talk about cooperation than to practice it (see BusinessWeek.com, 11/13/06, "Who's Afraid of Charlie Rangel?").

Just how friendly things remain may well depend on how leaders grapple with key economic issues awaiting the 110th Congress (see BusinessWeek.com, 11/8/06, "Capitol Hill's New Reality"). Among the top business concerns likely to play out in 2007:

Minimum wage. The day after the election debacle, President Bush said he thinks he can find common ground with Democrats on raising the minimum wage. But the President wants to couple any wage hike with a series of tax incentives aimed at small businesses that would bear most of the cost of higher salaries.

Democrats would prefer to simply raise the minimum wage from $5.15 to $7.25, the first such hike in a decade, without any business sweeteners. They have the votes, and current House Minority Leader Nancy Pelosi (D-Calif.) promises action in the first 100 hours after she becomes Speaker on Jan. 3. Since the President won't want the first disagreement of 2007 to be a veto of a minimum wage increase, he'll probably swallow his pride and go along.

Drug prices. Democrats will try to modify the new Medicare prescription-drug benefit passed by Republicans. They want to repeal a Republican provision that forbids the federal government from negotiating with pharmaceutical companies for volume discounts. Democrats also will push legislation that would allow importation of some prescription drugs from Canada. The Administration has strongly opposed the reimportation measure, and the President may veto such a proposal.

Big Pharma will dispatch its lobbyists to try to kill both measures. But Bush probably doesn't have the votes on either side of the aisle to block the new negotiating authority, so he may go along.

Immigration. Companies are likely to win big on immigration with the Democratic Congress. The Democratic leadership agrees with President Bush and business groups on the need for comprehensive immigration legislation that includes a guest-worker program, some sort of legalization for workers illegally in the U.S., a tougher enforcement system requiring employers to verify that workers are legal residents of the U.S., and stepped-up border enforcement. Some Republican hardliners may squawk, but Bush and the Democrats are already planning the White House signing ceremony.

Trade. The President's power to negotiate trade agreements without congressional amendments (known as "fast-track authority") is up for renewal next year, and incoming House Ways & Means Committee Chairman Charles Rangel (D-N.Y.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) are willing to play ball—if the White House agrees to protections for labor and the environment. Rangel also wants to extend trade preferences for Africa, the Caribbean Basin, and the Andean nations until 2020. Sounds like the makings of a deal.

Energy. House Democrats are vowing to repeal tax breaks for oil companies that were contained in the Bush-Cheney energy bill rammed through by the Republican Congress.