Washington Bulletin 9/11

September 12, 2017
Washington Update

On Capitol Hill

Congress Sends Debt Ceiling, Continuing Resolution, Hurricane Aid Package to Trump

Congress cleared legislation Friday to suspend the U.S. debt limit and provide $15.25 billion for hurricane relief under a deal between President Donald Trump and Democrats. In a 316-90 vote, the House agreed to suspend the debt limit and keep the government open through Friday, December 8 and finance aid to flood victims in Texas and other parts of the Gulf Coast. The measure, already passed by the Senate, now goes to the President for his signature.

Immediately before the vote, House Republicans were infuriated at the sales pitch for the deal by Treasury Secretary Steven Mnuchin and White House budget director Mick Mulvaney. In a private meeting, lawmakers hissed and groaned when Mnuchin told them, “vote for the debt ceiling for me,” said Representative Mark Walker (R-NC), chairman of the conservative Republican Study Committee.

It was an “incredibly weak performance” by the Treasury Secretary, Representative Walker said. Representative Dave Brat (R-VA) called Secretary Mnuchin’s comments “intellectually insulting.” Despite the grumbling, most Republicans voted for the deal.

To many Republicans, President Trump’s deal with Democrats showed that even with their party in control of the White House and both chambers of Congress, they cannot easily accomplish their goals. They wanted spending cuts and a longer-term debt limit extension. House Speaker Paul Ryan (R-WI) backed the bill after initially seeking a longer extension and then reversed course after the President agreed to the short-term deal with Democratic leaders.

Republicans say Democrats may gain the upper hand in negotiations when the short-term agreements are due to expire in December. The agenda likely will include President Trump’s proposed border wall with Mexico, his decision to end a program that lets young undocumented immigrants stay in the U.S., and perhaps the debt limit.

All of the votes against the bill were cast by Republicans. Many GOP members said they had little choice but to support the measure because funding is urgently needed for disaster relief.

“Of course I have to vote yes. It’s my district that was hit,” said Representative Blake Farenthold (R-TX), whose Texas district includes Corpus Christi and much of the area along the Gulf of Mexico damaged by Hurricane Harvey. “The saving grace of this is we can revisit the debt ceiling in a couple of months and maybe get some spending reforms.”

With Hurricane Irma bearing down on Florida and tens of thousands suffering flood damage along the Gulf coast from Harvey, the bill will replenish the depleted Federal Emergency Management Agency (FEMA) disaster relief fund with $7.4 billion, plus $450 million in funding for the Small Business Administration and $7.4 billion for the Community Development Block Grant (CDBG) program to address housing needs in disaster zones.

The bill, H.R. 601, also extends the nation’s flood insurance program to Friday, December 8, a high priority in the wake of Harvey and Irma.

An earlier version of the bill containing just Harvey aid passed the House on a 419-3 vote Wednesday. The President then surprised Republicans by agreeing to attach the short-term debt ceiling and government funding bill, even though the final bill doesn’t include funding for a border wall. In May, President Trump suggested a government shutdown in September would be needed to force Democrats to fund the wall on the U.S.-Mexico border.

Bruising December

The legislation sets up a bruising December for Congress, which is already attempting to rewrite the U.S. tax code by the end of the year. December presents big opportunities for congressional Democrats and risks for Republicans.

Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Nancy Pelosi (D-CA) had advocated for a short-term debt ceiling increase to obtain more leverage in December talks over a final spending deal for fiscal 2018.

Democratic leaders, knowing their votes are needed to pass a debt ceiling increase, plan to seek higher domestic spending in those talks. They may use the occasion to push for legislation exempting undocumented immigrants who arrived in the U.S. as children from deportation.

Senator Schumer said his hopes for an immigration deal have been raised by the “happy ending” that President Trump provided to the September fiscal debate. President Trump and Democrats also discussed working on a deal to end periodic debt ceiling votes, an idea that splits Republicans.

“For many years, people have been talking about getting rid of debt ceiling altogether,” President Trump told reporters Thursday, September 7 at the White House. “And there are a lot of good reasons to do that, so certainly that’s something that will be discussed.

House Speaker Ryan and Senate Majority Leader Mitch McConnell (R-KY) lost the fight over the length of the debt ceiling extension at a tense Oval Office meeting Wednesday, September 6 hours after Speaker Ryan denounced a short-term debt extension in a press conference.

“The longer, the better for the stability of the credit markets. That’s my strong opinion,” the House Speaker said afterward. He added that in agreeing to the short-term extension, President Trump “was interested in making sure that this is a bipartisan moment while we respond to these hurricanes.”

 

Harvey Vote Leaves GOP Frustrated on Fiscal Issues

With debt limit and spending decisions put off for three months, House Republicans said they are still looking to find a path forward on key fiscal issues that divide the GOP conference.

The House cleared legislation (H.R. 601) the morning of Friday, September 8 that would provide hurricane-relief money, suspend the debt limit and keep the government funded through Dec. 8. However, 90 Republicans voted against the measure even after administration officials made a pitch for the package that many members described as uninspiring.

Those defections spell a tough road ahead for Speaker Ryan, who had to rely on Democrats to pass the bill. In the GOP meeting, House leaders didn’t outline any plans for a a longer-term debt limit legislation when the current short-term fix expires, members said.

“There was a lot of sentiment in our caucus that there was not even a modicum of
effort to address the cause of the deficit, raising the debt ceiling without
some way to address how come we got there,” said Representative Hal Rogers (R-KY), an appropriations cardinal.

The time spent on the flood aid has also distracted lawmakers from other appropriations work. The House left last week without completing work on an omnibus spending package, which they hope to finish this week. Lawmakers left town also in part so that Florida lawmakers could get back home before Hurricane Irma pressed down on their state.

Republicans also are still trying to devise tax overhaul legislation, an issue that didn’t come up at their meeting on Friday with Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Mick Mulvaney. Some Republicans have called for more details on tax cuts before they are willing to support a budget resolution — another item on Republicans’ to-do list that has been delayed.

House Budget Chairman Diane Black (R-TN) said today the budget resolution won’t be brought to the floor next week.

President Trump directed a series of tweets at Republican congressional leaders the morning of Friday, September 8, saying, “Republicans, sorry, but I’ve been hearing about Repeal & Replace for 7 years, didn’t happen!” He called on the Senate to eliminate the legislative filibuster and on Republicans not to wait until the end of the month to move forward on tax cuts.

The President is “annoyed at Republican leadership,” Budget Director Mulvaney stated.

Representative Cole stated the failure to repeal and replace the Affordable Care Act may have played into President Trump’s decision. The President may have wanted to send a message to congressional Republican leaders that he doesn’t have to rely on them if they don’t make progress on key issues, Representative Cole said.

“I think there’s a message, ’Hey you guys, you didn’t get repeal and replace done. I’ll go someplace. I’m going to make some sort of deal,’” Representative Cole said.

 

House Continues to Consider Omnibus Spending Bill

This week the House plans to continue consideration of amendments to the omnibus spending package (H.R. 3354) that combines eight spending bills with a House-passed measure that included four appropriations measures.

Among the Republican amendments the House adopted last week were those that would block funds from going to so-called “sanctuary cities” that don’t cooperate with federal immigration enforcement, block funds for Obama Administration regulations on oil and gas production, prevent the State Department from closing or merging its Office of International Religious Freedom, block funds for enforcing endangered species designations that have not undergone a review and block funds from implementing any project labor agreement on government construction projects.

The House adopted Democratic-sponsored amendments that would bar the State Department from closing or merging the Office of the Special Envoy to Monitor and Combat anti-Semitism or the Office of Global Criminal Justice; block funds from being used to reduce the number of participants in several State Department fellowship programs and strike language that would have barred funding from enforcing the Obama administration’s National Ocean Policy. The House also adopted a Democratic amendment that would add funds for the Federal Aviation Administration’s Small Community Air Service Development Program.

 

Tax Overhaul May Be Less Ambitious Than GOP Planned

President Trump will sign a tax bill this year, but the legislation may not be as ambitious as GOP leaders had originally hoped, according to Representative Mark Walker (R-NC), chairman of a large conservative caucus.

The plan will be more than just rate cuts, according to Representative Walker, which means it could still include some structural changes, such as those that would deter offshore profit shifting by corporations.

“I think it will be reform — it may not be exactly what we wanted starting out this year,” North Carolina’s Representative Walker stated. “I think that will be subjective as to who is interpreting what level of overhauling may happen, but I am confident and I’ve said, even weeks ago, that I expect that to happen before Thanksgiving.”

While the Trump Administration is facing backlash from conservative Republicans over a hurricane relief bill that includes a short-term extension of the federal debt limit, Representative Walker’s comments show that he is still relatively optimistic about the timing of a tax bill. The debate over whether tax legislation will consist of tax cuts that expire, a lasting revamp of the tax code, or a combination of the two, has dominated Washington.

Republicans, who control only 52 seats in the Senate, plan to use congressional budget rules that allow for approving a tax bill with a simple majority. But those rules also require tax cuts to be offset so they don’t add to the long-term budget deficit. Changes that increase the deficit would have to expire over time.

‘Stronger Vision’

The so-called Big Six — made up of White House officials and congressional leaders involved in tax negotiations — jointly released a two-page statement in July that outlined a broad set of agreed-upon tax principles. Specifics, including such basic matters as where to set the corporate tax rate and how to set up individual tax brackets, have yet to emerge.

Representative Walker, who chairs the Republican Study Committee of about 150 members, was less complimentary of Treasury Secretary Steven Mnuchin — a member of the Big Six. Secretary Mnuchin alienated some conservatives during his argument for a debt limit increase by not taking seriously their demands for policies to address the deficit.

“We’re going to need to see a stronger vision from him when it comes to tax reform as opposed to just the two or three talking points,” Representative Walker said. “I’m not saying he’s not the person for the job, but he needs to do a stronger job than what he’s done on the debt ceiling.”

House Speaker Paul Ryan (R-WI) is “the best policy person in the House,” Representative Walker said, but he and all Republicans need to be more “demonstrative in our position.”

“We’ve got to hold our positions, not just from a visionary stand point, but the action steps and execution that creates the opportunity to be able to accomplish those goals,” Representative Walker said. “That’s where I see us going this fall.”

 

Senate Appropriations Committee Advances Foreign Operations Spending Bill

Thursday, September 7, the Senate Appropriations Committee unanimously advanced the fiscal year 2018 State and Foreign Operations bill with about $51.2 billion in discretionary funding.

The bill is $1.9 billion below the fiscal year 2017 level, $10.7 billion above President Trump’s request, and $3.8 billion more than House State and Foreign Operations bill. Within the mark, the Senate bill would offer $30.4 billion in base discretionary funding, plus $20.8 billion in Overseas Contingency Operations funding, which does not count against budget caps.

 

Senate Appropriations Committee Advances Bill That Would Increase HHS Funds

Senate Appropriations Labor-HHS-Education Subcommittee’s bill advanced out of full committee, Thursday, September 7. The bill provides $164.1 billion in discretionary funding, $3 billion above fiscal year 2017 levels and $8.1 billion above the House’s bill.

Notably, the bill does not include new funding to implement Affordable Care Act. Further details include providing:

  • $79.4 billion for Health and Human Services, $1.7 billion above fiscal year 2017 and $2.2 billion more than House bill;
  • $36.1 billion for National Institute of Health, a $2 billion increase over fiscal year 2017 and $900 million more than House bill;
  • $68.3 billion for the Education Department, $29 million above fiscal year 2017 level and $2.3 billion above House bill; and
  • $12 billion for the Labor Department, $61.5 million below fiscal year 2017 and $1.2 billion above House bill.

 

Senators Look to Curb Health Spending 

A Senate panel kicked off a months-long examination of health-care spending, with an eye to curbing federal health spending.

While nearly a quarter of the Senate discussed short-term fixes for the country’s individual health insurance markets, the Senate Homeland Security and Governmental Affairs Committee Wednesday, September 6 discussed how to make health care cheaper, both for Americans and the government. The debate was broad, touching on price transparency by doctors and hospitals, and on Medicare spending.

The hearing was a response to Republicans’ failed effort to repeal the Affordable Care Act, Senator Ron Johnson (R-WI), chairman of the committee, stated. Conservatives were given little information about why insurance premiums were rising, he said, and little opportunity to explore solutions.

“This is the problem-solving process,” he said. “You identify a problem and find a solution.”

Ranking member Senator Claire McCaskill (D-MO) said during the hearing she could support legislation forcing insurers and hospitals to better outline the cost of health services.

Senator Johnson’s committee has broad oversight authority over federal spending including Medicare and Medicaid, according to Republican and Democratic aides. The panel is expected to hold more hearings through 2017.

The overall share of the U.S. economy devoted to health-care spending reached a high of 17.8 percent in 2015, up from 17.4 percent in 2014, according to data from the Centers for Medicare & Medicaid Services. As a country, the U.S. spent $3.2 trillion on health care in 2015.

This rise in health-care spending, partly driven by a rise in the cost of delivering health care, is not easy to slow down, Katherine Baicker, dean of the University of Chicago’s Harris School of Public Policy, said at the hearing. The bulk of health-care spending still goes toward physician and hospital services, because insurance companies generously reimburse for these services.

“Like patients, providers respond to the payment system,” she said. “We get more of the services that are generously reimbursed.” If insurers don’t cover these services generously, though, beneficiaries might not seek out the services they need, she said.

 

Mandatory E-Verify Bill Introduced in House 

All U.S. employers would be required to use the E-Verify electronic employment verification system under a bill introduced in the House.

The Legal Workforce Act (H.R. 3711), introduced by Representatives Lamar Smith (R-TX) and Ken Calvert (R-CA) and House Judiciary Committee Chairman Bob Goodlatte (R-VA), would phase in the E-Verify requirement over a two-year period, starting with the largest employers. The agriculture industry would have an additional six months—or 30 months total—to come into compliance.

Mandatory E-Verify has been on the Republican immigration agenda for several years and appeared in the White House’s budget request for fiscal year 2018. It’s unlikely that a standalone bill would get through Congress, but it could be paired with the Dream Act or another measure to provide legal status to young, undocumented immigrants.

The Trump Administration last week announced a phase-out of the deferred action for childhood arrivals program, an administrative program that protects this group of immigrants from deportation and allows them to work. The program’s end could create greater urgency in Congress to enact a law protecting Deferred Action for Childhood Arrivals (DACA) recipients.

A mandatory E-Verify bill (S. 179) was introduced earlier in the Senate by Judiciary Committee Chairman Charles Grassley (R-IA).

 

In the Administration

President Trump Says DACA Bill Should Protect Immigrants, Reinforce Border

President Donald Trump said Wednesday, September 6 that he envisions Congress passing legislation that will both strengthen U.S. border security and provide legal status for immigrants brought illegally to the country by their parents.

“Congress, I really believe, wants to take care of this situation,” President Trump stated aboard Air Force One shortly after meeting with a bipartisan group of congressional leaders.

The President said he would like to see a bill that combines border security measures — he didn’t specify his proposed wall on the Mexican border — and a “great DACA package where everyone is happy.” The legislation would ideally provide long-term legal status for immigrants who enrolled in an Obama-era Deferred Action for Childhood Arrivals (DACA) program, which provided work permits and temporary protection from deportation, he said.

On Tuesday, September 5 President Trump announced that he would wind down the program over the next six months, saying he didn’t believe the DACA program would survive a lawsuit threatened by Republican attorneys general in nine states. “I’d like to see a permanent deal and I think it’s going to happen,” he said.

The President said there was wide consensus on Capitol Hill to address the issue, including among conservatives. He said Democratic leaders Representative Nancy Pelosi and Senator Chuck Schumer had also signaled their interest in a deal during their meeting earlier Wednesday, September 6 in which the President took Democrats’ offer to combine a three-month suspension of the statutory limit on the nation’s borrowing authority with a government spending plan and hurricane aid.

“Chuck and Nancy want to see something happen, and so do I,” the President said. He said that “we’ll see” what the administration could do if lawmakers don’t strike a deal on DACA, but that he’s confident an agreement would be reached. He said his caveat — first suggested in a tweet late Tuesday, September 5 after he had called on Congress to act on the issue — wasn’t a “mixed signal.”

The move to end the existing program has provoked sharp backlash from politicians across the political spectrum and from the business community. And despite the president’s confidence, immigration creates tough politics for many Republican lawmakers. Divisions have already surfaced between moderates and conservatives in the party in the wake of President Trump’s announcement.

 

OMB Asks Agencies for Next Year’s Regulatory Plans 

Federal agencies must submit by Monday, September 18 their plans to regulate and deregulate in the year ahead, although the Office of Management and Budget (OMB) still has not given them their regulatory budgets for fiscal 2018.

Agencies also are being asked to fill out new worksheets to show compliance with Executive Order 13,771, which requires them to eliminate two regulations for every one issued and offset the cost of the new one. The new worksheets submitted to OMB will clearly identify deregulatory actions but won’t be made public. “This process highlights agency priorities, promotes planning and coordination, and encourages public participation in the regulatory process,” said an OMB memorandum dated Friday, August 18.

No Surprise Rules

OMB routinely issues a memo twice yearly calling for regulatory data from agencies to remind them of their obligation to submit plans for the semiannual unified federal regulatory agenda.

Beginning with the fall 2017 agenda, agencies were told they should not issue regulations in the coming year that have not been included in the most recent version of the agenda, the latest memo said.

The Trump Administration issued its spring 2017 unified agenda on Thursday, July 20, which listed 860 proposed regulatory actions that were withdrawn or removed from active status.

New Worksheet

Generally, agency plans should describe the most important significant regulatory and deregulatory actions that the agency reasonably expects to issue in proposed or final form during the upcoming year through October 2018, the memo said.

This year, agencies should balance the costs of anticipated regulatory actions issued within the fiscal year with cost savings from anticipated deregulatory actions, the memo said.

Beginning with the fall 2017 agenda, agencies must designate their regulatory actions to provide greater transparency to the public, the memo said. A new data field will require the input of one of five preliminary designations: deregulatory, regulatory, exempt, waived, or other. In addition, while agencies’ agenda submissions apply to fiscal 2018, agencies must update their fiscal 2017 submissions with these designations, the memo said.