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Five Things to Watch This Week

by Ed Kowalski, published

The Supreme Court decided it will address the issue of same-sex marriage on Friday and will make a decision on the Defense of Marriage Act (DOMA) and California’s Proposition 8, which bans same-sex marriage in California. While this will certainly be an issue to watch in the future, the court will not hear cases until March. However, there are other important things to watch this week:

Michigan Right-to-Work Bill

Right-to-work legislation in Michigan, which received more support in the Michigan Legislature on Thursday, could be signed into law this week after a final vote. The law would dictate that workers at unionized companies do not have to pay union dues. Analysts believe the law could spur a chain reaction through other states that are considering similar legislation.

Proponents, including the US Chamber of Commerce, believe it would attract businesses to Michigan which would lead to economic growth. Opponents argue that the decreased bargaining power of unions would result in a decrease in wages for workers. Union workers and pro-union activists are planning large demonstrations in the capital.

Jim DeMint's Open Senate Seat

Sen. Jim DeMint (R-SC) announced on Thursday he is retiring from the Senate to become the president of the Heritage Foundation. South Carolina Governor Nikki Haley stated she will act quickly to choose a replacement. Comedy Central personality Stephen Colbert made a tongue-in-cheek bid for the seat, which has actually been given some credence by analysts, including MSNBC’s Martin Bashir.

Governor Haley said she will not choose Colbert. She also re-iterated that she will not consider herself either, but confirmed she will seek a conservative appointee with a similar philosophy of government as DeMint. Sen. DeMint has expressed his opinion that Rep. Tim Scott should take his place, which would make Scott the only African-American member of the Senate. US Rep. Mick Mulvaney is also considered to be among the front runners.

Debate on TAG Extension

On Monday, the Senate will resume debate on extending the Transaction Account Guarantee (TAG) program for two more years. Under the law, the FDIC guarantees liquidity to lending markets.

TAG was designed to promote stability in unsecured funding markets while discouraging complex and risky loan structures. The program helps banks hold on to liquidity with unlimited guarantees to zero interest deposits, currently estimated to be over $1 trillion. Banks are eager to see the law extended, while the mutual fund industry wants the program to expire so some of the one trillion can go into the mutual fund market.

The bill, introduced by majority leader Harry Reid, could have enough support to pass the Senate. Some senators, however, such as Bob Corker (R-TN) oppose the extension since large institutions are the largest holders of TAG deposits and the need for such guarantee is now questionable.

Broadband Spectrum Law and Medicaid Expansion Hearings

On Wednesday, the House Energy and Commerce Committee will hold a hearing on the new broadband spectrum law to discuss how to meet the ever-increasing demand for mobile broadband and building a public safety broadband network. The original legislation was designed to create more jobs while meeting demand. FCC commissioners will testify.

On Thursday, the Health Subcommittee will hold a hearing on the implementation of the Affordable Care Act's exchanges and Medicaid expansion. Witnesses will include state health officials and officials from the Center for Consumer Information. The subcommittee seeks to gain clarification from the administration on specific details regarding the health care law.

Negotiations to Resolve the Fiscal Cliff

There is no specific activity scheduled this week, besides presumable talks between both sides. Congress is scheduled for holiday recess on December 16, unless it extends into an emergency session. If lawmakers decide to go home, they have one week to reach an agreement on middle class tax rebates and entitlement spending legislation to avoid the fiscal cliff. This remains an issue to keep a close eye on.

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