As curtains rise on the 114th Congress this January, experts on economic and financial policy have a critical piece of advice:

Curb your enthusiasm.

Republicans may finally have control of both the House and the Senate, but they may end up in regular jousts with President Obama over key economic legislation, when not sparring with each other.

On the very first day of the session, the White House announced that President Obama will veto the Keystone pipeline legislation. Armed with a phone and a pen, Obama chose to overrule Congress with executive action. In 2015, he may well use that pen to veto many laws Congress attempts to pass.

However, the legislative agenda on key financial issues will be significantly different this year, thanks to the changed dynamic in Washington.

Tax Reform: ‘a broad and deep river to cross’

On Christmas Eve two weeks ago, outgoing Ways and Means committee chairman Dave Camp, a Michigan Republican, retired from his 24-year Congressional career after introducing a 978-page draft of the Tax Reform Act of 2014.

But tax reform is a mountain so steep that even this draft is being seen as a sort of victory, and as a start toward larger reform. Early versions of the draft raised Wall Street’s hackles for daring to impose a tax on big banks. They responded by canceling all GOP fundraisers until Camp and his fellow Republicans mended their ways, decisively quashing the financial tax.

Though many – particularly businesses – would like to see comprehensive tax reform pass in the new Congress, Tony Fratto of Hamilton Place Strategies, downplays the possibility. He calls it “a very broad and deep river to cross.”

The 114th Congress is sworn in by Speaker of the House John Boehner inside the House Chambers of the US Capitol Building on January 6, 2014, in Washington DC. Photograph: UPI /Landov / Barcroft Media

New House Committee on Ways and Means leader Paul Ryan, a Wisconsin Republican, is largely in agreement with Obama on some aspects of corporate tax reform. But the White House and Congress will crucially need to negotiate lowering the 35% corporate tax rate. Republicans want it reduced to 25%; the President prefers 28%.

Although both parties agree that the rate should be lowered, they are still at odds about which tax breaks should be discarded or modified, and how. The taxing of offshore income for US businesses, for instance, is a major bone of contention.

“There’s a lot of disagreement, even among Republicans, about what tax reforms are supposed to do and what it would accomplish,” says David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy, ruling out a comprehensive tax-reform legislation in the near future.

International trade: will action match rhetoric?

The issue that Congress is most likely to make progress on, experts agree, is trade agreements. The Bipartisan Congressional Trade Priorities Act of 2014, attempted to fast-track crucial trade agreements with Asia. The Trans-Pacific Partnership (TPP) will likely get enacted earlier than expected this year, says Fratto.

Obama is particularly keen these trade agreements, and it might be easier for him to get them through the Senate with Republicans in control than with Democrats, suggests Wessel.

A report by the Goldman Sachs Research group, however, calls the TTP mere rhetoric, snuffing out any hope on the matter. Meanwhile, experts are questioning the secrecy of the TPP, and observing that, besides being bad news for the environment, it really only benefits big corporations.

‘I don’t believe that the Federal Reserve is in any way corrupt’

In the last few years, there has been increased legislative interest in scrutinising the Fed. The Federal Reserve Transparency Act of 2014 sailed through the House with an overwhelming majority in the Senate. The bill was originally drafted by former Republican representative from Texas Ron Paul , whose son Rand Paul, a Republican representative for Kentucky, has vowed to reintroduce the bill in the Senate this year. In the House, Thomas Massie, a fellow Kentucky Republican, also expressed his desire to bring the legislation up in the very first week.



Dubbed the “Audit the Fed” bill, the legislation will require the Government Accountability Office to examine the Federal Reserve’s monetary policy decisions. This is a pretty damning constraint on the Fed’s role as an independently functioning body.

Fed chair Janet Yellen has expressed displeasure at the ‘Audit the Fed’ bill. Photograph: JIM LO SCALZO/EPA

Fed chair Janet Yellen is livid at the prospect of government oversight. She explained her opposition to the bill in her first Congressional hearing.

“I don’t believe that the Federal Reserve is in any way corrupt, and I believe that the confidence of markets in the Federal Reserve and in our monetary policy-making would not be enhanced by that type of audit,” she said.



The Debt Ceiling: a dangerous time again?

Even though another government shutdown is unlikely, the debt limit debate may become the most disruptive episode in Congress this year.

“I think it has the possibility of being a really dangerous time again,” cautions Fratto. “I don’t think enough members of Congress really understand the debt ceiling.”Those members of Congress for whom opposition is a matter of ideology may prove a pain in the neck for Republican leaders trying to raise the debt limit, he explains.

The problem, according to him, is that the debt limit is a responsibility of the controlling party in each house, and Democrats may feel no obligation on behalf of Congress to support pertinent legislations this year.

A protester holds a sign during a demonstration in front of the White House in Washington, DC, on October 13, 2013 demanding an end to the US federal government shutdown. Photograph: JEWEL SAMAD/AFP/Getty Images

More comebacks for infrastructure, financial sector

As for infrastructure, Senator Michael Bennett, a Colorado Democrat, promised in an op-ed to revive the Partnership to Build America Act, with Senator Roy Blunt, a Missouri Repbulican, re-upping a bill that would create an infrastrucure bank from funds obtained selling bonds to businesses. In exchange, under the bill, companies can shield offshore income from taxation. An earlier bill, introduced by Maryland Republican representative John Delaney, was not enacted; it was criticized for incentivizing tax-evading businesses by giving them a way out the front door.

Last May, the Senate Banking Committee approved the Housing Finance Reform and Taxpayer Protection Act of 2014 , which would wind down Freddie Mac and Fannie Mae and replace it with a federally supported private-insurance system called the Federal Mortgage Insurance Corporation (FMIC)

Election year was also the year of failed legislations, but the bill was carefully put on hold until electioneering was over, making a comeback likely.

On the financial sector, Wessel says, there may be some action on the Dodd-Frank regulatory front – “particularly because the chairs of the House and Senate banking committee are so hostile to big banks,” and Obama too may be keen on signing such legislation.

Congress’s growing understanding on education

Obama is all set to speak in Tennessee about higher education, at the outset of what promises to be a busy year overall for education policy. Foremost on the list will be a move to reauthorize the Higher Education Act, signed first in 1965.

Senator Elizabeth Warren, a Massachusetts Democrat, has started the conversation on student debt, experts say. Photograph: Jose Luis Magana/AP

It was last reauthorized in 2008, and there will be real consequences if it isn’t reauthorized again soon, says Jennifer Wang, the policy director of Young Invincibles, a DC-based advocacy.

The organization was intensely involved in promoting Senator Elizabeth Warren’s Bank on Students Emergency Loan Refinancing Act, which died in the Senate last year. Wang believes that Warren nevertheless succeeded in starting a national conversation on student loans.

Wang says that Congress will tackle reauthorization – “this Congress,” if not this year. She says that there is “growing understanding that there needs to be alternative pathways to success for our generation,” alluding to bills that focus on innovative ways to minimize student debt.



Early jobs legislation has an Obamacare focus

The job market is likely to be a sore point between Obama and Republicans, with Republicans sure to argue that the president has not done enough for employment levels.



The House has been swift in taking up veterans’ jobs in the first week with the Hire More Heroes Act of 2015 which frees up small businesses to hire veterans without counting them as full-time employees for health-insurance limits.

The Save American Workers Act of 2015, too, is an indirect affront to Obamacare, restoring the workweek to 40 hours. It remains to be seen whether either of these bills gains momentum, even as Obama prepares to speak about manufacturing jobs, ahead of his State of the Union address.