Washington Bulletin 11/27

November 28, 2017
Washington Update

On Capitol Hill

Senate Defense Spending Plan Paves Way for Talks to Bust Caps

The Senate Appropriations Committee set the stage for bicameral talks to raise spending caps with its release last week of $581.3 billion fiscal 2018 defense legislation, $59.3 billion above the legal ceiling set for Pentagon funding.

The proposed measure would exceed the $516.1 billion fiscal 2017 Pentagon spending and would be $15.4 billion above President Donald Trump’s request for fiscal 2018.

While the Senate Appropriations Committee does not plan to hold a markup on its defense measure, the numbers will serve as a marker for congressional leaders seeking to hammer out a spending package for the rest of fiscal 2018.

Leaders will have to secure some Democratic support to raise spending above the $522 billion cap for the Pentagon as a result of the 2011 Budget Control Act (Public Law 112-25). The Budget Control Act sets a cap of $549 billion for all national security programs, and Pentagon spending makes up the bulk of that. The current stopgap spending measure runs through Friday, December 8, and leaders expect they will have to pass another short-term patch to complete negotiations.

“This proposal recommends funding for programs necessary to protect U.S. national security interests,” Senate Appropriations Committee Chairman Thad Cochran (R-MS) said in a statement. “However, we still require a budget agreement to establish a top-line funding level for national defense spending.”

The spending bill also recommends $65 billion in war funds, the so-called Overseas Contingency Operations account, which is not subject to caps, bringing the total amount for the Defense Department to $646 billion for the fiscal year that started Sunday, October 1. Under the House-passed fiscal 2018 defense spending measure (H.R. 3219), the Pentagon would receive $658.1 billion.

Border Wall Funds Set Stage for December Immigration Showdown

Senate Republicans are following through on a promise to fund portions of a wall on the U.S.-Mexico border, a measure Democrats have warned could sink a year-end spending deal.

The inclusion of funds for the border wall President Trump promised during his campaign puts appropriators on a partisan track, Democrats said. It will take bipartisan support to reach the 60 votes necessary to pass a spending deal through the Senate, and Democrats have criticized Republicans’ insistence on including funding for the wall. Democrats also want a year-end spending deal to include legislation (S. 1615) allowing undocumented immigrants brought to the U.S. as children to stay.

The $51.6 billion Homeland Security appropriations bill “funds a costly and ineffective border wall that is wasting taxpayers’ money and blocking a bipartisan debate on this important legislation,” Senator Jon Tester (D-MT), ranking member on the Homeland Security subcommittee, said in a statement.

The Senate Appropriations Committee has now released all 12 of its bills, although they will not hold markups on the Defense, Homeland Security, Financial Services or Interior-Environment appropriations bills. Senate leaders have yet to mention any plans to hold floor votes on any of the 12 bills.

The Senate Homeland Security bill, released last week, would provide $51.6 billion in discretionary funding, a $9.2 billion increase over fiscal 2017 levels and $7.3 billion higher than the House’s bill.

The bill would provide:

  • $13.5 billion for U.S. Customs and Border Protection, $1.3 billion higher than in fiscal 2017
  • $6.7 billion for Immigration and Customs Enforcement, $230 million above fiscal 2017
  • $11.2 billion for the Coast Guard, about $720 million above fiscal 2017
  • $7.4 billion for the Federal Emergency Management Agency’s Disaster Relief Fund, about $23 million higher than the fiscal 2017 level
  • $4.7 billion for the Transportation Security Administration, about $500 million lower than fiscal 2017
  • $2 billion for the Secret Service, $89 million below fiscal 2017
  • $3.3 billion for the National Protection and Programs Directorate, $9 million above fiscal 2017

The bill would increase spending on border enforcement compared with fiscal 2017, but it falls short of the White House requests. The bill calls for $4.4 billion for U.S. Border Patrol’s border security operations. That’s more than the $4.3 billion in fiscal 2017 but less than the $4.5 billion the Trump Administration sought.

Senate Appropriations Committee Releases Interior/EPA and Financial Services Bills

Financial Services FY18 Senate Mark

Senate Republican appropriators bashed the Internal Revenue Service (IRS) in the committee report tied to their Financial Services appropriations bill, saying the agency does not make taxpayer services a high enough priority.

While the bill keeps IRS funding level at $11.1 billion, it emphasizes taxpayer services and reduces funds elsewhere. The measure would appropriate $2.5 billion for IRS taxpayer services, up from $2.2 billion in fiscal 2017. The agency’s enforcement and business systems modernization accounts would be cut.

Republican appropriators did not pull punches in the committee report, accusing the agency of sabotaging taxpayer services in order to gain support for more funding.

“IRS management seems to have forgotten that their most important customers are not their own employees,” the committee report says. “They are the American people. This is particularly evident with respect to taxpayer services. The Committee is concerned about the IRS’s willingness to cut services to taxpayers in an effort to garner support for increased resources.”

The committee directed the IRS to increase staffing at Tax Assistance Centers — essentially kiosks for IRS customer service. Of the 376 centers across the country, 22 have no staff and 95 have only one staff member, the report says.

Interior/EPA FY18 Senate Mark

The Senate’s Interior-Environment appropriations bill would slash money for managing renewable-energy resources on federal lands, while increasing funds for oil, gas and coal management. Released Monday, November 20, the legislation includes $188 million for energy and minerals management, $15.2 million higher than in fiscal 2017.

The bill also provides $30,000,000 for the Water Infrastructure Finance and Innovation Act (WIFIA) Program. This level is equal to the fiscal year 2017 level when compared to funding provided from both the Consolidated Appropriations Act, 2017 (Public Law 115– 31) and the Further Continuing and Security Assistance Appropriations Act (Public Law 114–254). From within the amount provided, the Committee directs $5,000,000 to assist with the administrative expenses for the WIFIA program.

Greater investment in the replacement of aging infrastructure will help mitigate nationwide issues the Committee is tracking related to contaminants such as lead and arsenic, help address Combined Sewer Overflows and Sanitary Sewer Overflows, and allow systems to improve water delivery for residents. Of the recommended amount, $25,000,000 is provided for direct loan subsidization which may translate into a potential loan capacity in excess of $3,000,000,000 to eligible entities for water infrastructure projects. The Committee expects that EPA will issue loans for the first time in fiscal year 2018 and the Committee intends to closely monitor implementation.

Additionally, Democrats criticized the Interior-Environment bill for failing to offer a permanent fix for the U.S. Forest Service’s struggles to fund wildfire suppression. The bill adds an emergency buffer of $507 million to the 10-year average of suppression costs. Senators Ron Wyden (D-OR) and Jeff Merkley (D-OR) called on senators to take up the Wildfire Disaster Funding Act (H.R. 2862), which would treat wildfires more like other natural disasters, allowing the Forest Service to tap emergency funds once it runs out of regularly appropriated money for suppression.

 

Senate Finance Releases Tax Bill Ahead Of Floor Vote

The Senate Finance Committee released legislative text of its tax bill, in advance of floor action.

The panel approved its tax plan Thursday, November 16, though at the time the document was not written as bill text. The legislation would lower the corporate tax rate to 20%, limit the ability of companies to deduct interest expense, and overhaul the system for how multinationals pay federal taxes. The bill would also cut individual tax rates, provide a deduction for pass-through income, and allow full expensing on a temporary basis, according to an updated section-by-section summary.

The Senate bill’s inclusion of the sunset of individual and pass-through provisions in 2026 is one of its biggest differences with the House bill. The Senate is set to take up the bill as soon as next week, following the Thanksgiving recess.

“It’s the intent of everybody in the process that these tax reductions become permanent,” White House chief economist Kevin Hassett stated on Tuesday, November 21. “It’s appropriate that they have to prove themselves.”

The legislative text closely mirrored the plain-language summary approved in the Senate Finance Committee, but it included some discrepancies as well as some clarifications. For example, the bill does not include a sunset date for a provision allowing for college savings accounts for unborn children, but the section summary indicates it will expire after 2025.

The Senate Finance Committee did not immediately respond to a request to comment about the discrepancies.

 

Goodbye Gang: Exodus of U.S. House Chairmen Is Most Since 2006

House Republicans are on the cusp of a brain drain as experienced chairmen prepare to end their congressional careers in numbers unseen in more than a decade. One chairman quit early. The chairmen of four other full committees plus at least eight subcommittee chairmen are retiring or seeking other office.

With still a year to go until the election, that is the biggest exodus of the House members in charge of setting priorities and writing legislation since the 109th Congress in 2005-2006, when five Republican committee chairmen did not seek re-election. Democrats won a majority of House seats that year.

“The good effect of term limits is that they prevent seniority infarction. The pipeline keeps flowing, and there are opportunities for ambitious younger members,” Jack Pitney, a political scientist at Claremont McKenna College in California, said. “The downside is that they limit the committees’ institutional memory.  That’s a particularly serious problem when it comes to oversight.”

The departing full-committee chairmen of the 115th Congress are Representative Diane Black (R-TN) of the Budget Committee, who is running for governor; Representative Bob Goodlatte (R-VA) of the Committee on Judiciary; Representative Jeb Hensarling (R-TX) of the Committee on Financial Services; Representative Lamar Smith (R-TX) of the Committee on Science, Space, and Technology; and Representative Jason Chaffetz (R-UT), who led the Committee on Oversight and Government Reform before resigning in June. All were favored to win re-election, though some could not return as top Republican on the committee daises.

House Republican Conference rules restrict service as chairman or ranking member of a committee or subcommittee to three Congresses or six years total. House Republican leaders imposed the limits in the mid-1990s, following four decades in the minority watching Democratic committee chairmen “build their own fiefdoms,” as Pitney described it.

Reversely, there are not committee term limits for Democrats.

 

In the Administration

President Promises Infrastructure Bill ‘Soon After Taxes’

President Trump joined the chorus of administration voices promising Monday, November 20 that a long-awaited infrastructure package would come “soon” after he signs a tax bill. “We’ll be submitting plans on health care, plans on infrastructure, and plans on welfare reform—which is desperately needed in our country—soon after taxes,” President Trump said during a press availability before a Cabinet meeting.

President Trump first called for a $1 trillion infrastructure package during a February appearance before Congress. Later, his proposed budget included $200 billion in direct federal spending and called for an additional $800 billion in investments from private, state and local sources.

Since the self-proclaimed infrastructure week, when Transportation Secretary Elaine Chao promised a package by the fall or the third quarter, the Trump Administration has offered few concrete details on what an infrastructure package would look like and how to fund it.

Kevin Hassett, chairman of White House Council of Economic Advisers, pushed back against criticism that infrastructure has gone “nowhere.”

“Infrastructure has been a massive effort within the administration,” Hassett said.

Hassett announced that the Trump Administration has had about six meetings between principals and Cabinet secretaries to follow up on the president’s campaign promises, including infrastructure. “Infrastructure has been a major focus of this administration since before I got there. It’s been a major occupation of people at CEA since I got there. Infrastructure is definitely on the agenda to come out soon after tax reform,” Hassett said.

Administration officials have been meeting with congressional leaders to talk about taking up a legislative package on infrastructure, as recently as the week of Monday, November 13.

“We’re ready to go, we’re working closely with the White House to get something going,” House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) stated.

Trump Seeks $12 Billion to Fight Flooding Tied to Climate Change

Hidden in the Trump Administration’s $44 billion emergency budget request is a plan to expand an Obama-era effort to make cities and towns resilient to the more frequent storms tied to climate change.

The White House budget office is seeking $12 billion for a competition for flood-prone communities that scientists say are facing more numerous storms and greater flooding because of climate change.

As part of the $44 billion emergency budget request for the recovery from Hurricanes Irma, Harvey and Maria, which was sent to Congress Friday, November 17, the White House said it wants to direct $12 billion to a competition to help cities and towns become resilient to flooding. Among the policies the White House said it’s considering are “large-scale buyouts in areas of high flood risk.”

Other activities could include “structure hardening, forward-looking land-use plans, adoption of disaster resistant building codes,” the White House Office of Management and Budget said in a summary of their emergency funding request.

The contest would be run through the Department of Housing and Urban Development, providing community development block grant funds to states and territories that have had more than one major flood disaster in the last four years. Thirteen states, including Texas, Louisiana and Florida, would meet the criteria for the contest, according to an NRDC analysis.

To be sure, the funding request must be approved by Congress, and lawmakers of both parties have already expressed skepticism of the size and other details in the funding proposal.

The proposal, which is similar to resilience competitions on a smaller scale held by the Obama Administration in the aftermath of Hurricane Sandy, is an idea long championed by groups worried about the risks of climate change.

 

President Trump Pushes to Limit Facebook, Google Liability in New NAFTA

The Trump Administration is pushing to add legal protections in North American Free Trade Agreement (Nafta) that would limit the liability of internet giants such as Google and Facebook, marking the latest in a tug-of-war as policy makers balance policing the web with protecting free speech.

U.S. Trade Representative Robert Lighthizer included the proposal in an updated U.S. wish-list for the Nafta published during the fifth round of negotiations, which ended Tuesday, November 21. It comes as U.S. senators are advancing a bill, backed by President Trump’s daughter Ivanka Trump and Facebook Inc.’s Chief Operating Officer Sheryl Sandberg, that eliminates liability protections for websites that knowingly facilitate online sex trafficking. Some other tech companies and advocates have argued such legislation threatens to undermine their industry.

The U.S. is pressuring Canada and Mexico — the country’s top two export markets — to agree to limit “civil liability of online platforms for third party content,” according to the list of U.S. negotiating priorities published Friday, November 17. A major U.S. technology group, the Internet Association, had urged it to push for such language.

Canada and Mexico have rejected the U.S. proposal, according to four officials familiar with negotiations, speaking on condition of anonymity. Canada does not believe that type of provision belongs in a trade agreement, and also generally opposes reducing liability for internet companies, two of the officials said.

The Trump Administration’s move is in some ways a form of protectionism — the U.S. is in effect trying to enshrine protections for Silicon Valley in a trade agreement, essentially pushing policy beyond America’s borders.

‘Detailed Consultations’

The Nafta proposal is for cases not related to intellectual property rights, and comes with a caveat — it would be “subject to Nafta countries’ rights to adopt non-discriminatory measures for legitimate public policy objectives.” It’s unclear what measures countries could adopt to impose liability in certain cases.

Lighthizer defended the U.S. proposal, saying it’s based on exhaustive consultations with lawmakers. “The U.S. digital trade proposal has been informed by detailed consultations with Congress and would not prejudice the right of the United States and our Nafta partners to address important public welfare issues,” Emily Davis, a spokeswoman for Lighthizer, said.

The Nafta dispute over so-called “safe harbor” provisions for internet companies is one of the issues holding up an agreement on Nafta’s digital trade chapter, as officials from the three countries push to strike whatever deal they can as other divisive U.S. proposals loom large. The fifth round of talks ended without finalizing any new agreements, and negotiations are scheduled through March.