Washington Bulletin 9/18

September 19, 2017
Washington Update

On Capitol Hill

House Passes Spending Package as Lawmakers Eye December Talks

Thursday, September 14, the House passed a $1.2 trillion fiscal year 2018 spending package, laying down a marker ahead of negotiations with the Senate and White House over a final spending deal in December.

The 12-bill package (H.R. 3354), which includes $510 billion for non-defense discretionary spending and $621 billion for defense spending, passed by a vote of 211-198.

Bipartisan negotiations will be needed to avoid automatic spending cuts known as sequestration because the measure exceeds the Budget Control Act (BCA) military spending cap of $549 billion. The cap on non-defense discretionary spending is $516 billion. Democrats have criticized the focus on defense spending over non-defense spending.

While skinnier than the bills that Senate appropriators have marked up so far this year, the House omnibus would provide more funding overall than President Donald Trump requested. The White House sought $462 billion in non-defense discretionary funds, or $48 billion less than the House’s spending package. The White House had asked for $603 billion in defense funds, $18 billion less than the House measure would provide.

Any measure lifting the defense caps would require support from Senate Democrats, who’ve called for a corresponding increase in the caps for domestic programs.

House and Senate Appropriations Committee staffers have started informal discussions, and talks will intensify before the current continuing resolution (CR) funding runs out, said Representative Ken Calvert (R-CA), who chairs the House Appropriations Interior-Environment Subcommittee. Temporary government funding through the CR (Public Law 115-56) runs through Friday, December 8.

“We have an eventful day coming up in December, so I hope this leads to a budget agreement,” Representative Calvert said. “That would be the best thing.”

The Senate has not passed any appropriations bills. Appropriators have advanced eight of their 12 bills, avoiding some of the partisan flash points that turned off Democrats to the House’s bills.

House Disputes

In addition to debates over the topline numbers, the House spending package has prompted fights over policy riders — some that Republicans included, and others that Democrats were not permitted to have considered.

“The process for this bill has been outrageous, and this debate is an utter waste of time,” House Appropriations Committee Ranking Member Representative Nita Lowey (D-NY) said in a floor speech.

The House Rules Committee didn’t allow a vote on an amendment that would have barred the federal government from interfering in areas that have legalized medical marijuana, including 29 states, the District of Columbia, Guam and Puerto Rico. Offered by Representative Dana Rohrabacher (R-CA), the House has included the provision since fiscal year 2015, and the Senate Appropriations Committee incorporated it in its fiscal 2018 proposal. Senate subcommittee Chairman Senator Richard Shelby (R-AL) has said he would like to see it omitted from a final spending deal.

Democratic amendments that didn’t get floor votes included a proposal to let participants in the Deferred Action for Childhood Arrivals (DACA) program eligible to work for the federal government.

 

GOP Leaders Say Tax Plan Coming as Trump Says It Won’t Help Rich

Trump Administration officials and congressional Republican leaders are promising a new framework in two weeks for legislation that would overhaul the U.S. tax code — though they have shied away from releasing any details about how the changes would affect individuals or corporations.

President Trump, however, told reporters that the plan would benefit the middle class, not the wealthy. “I think the wealthy will be pretty much where they are,” he said Wednesday afternoon. “They have to go higher, they’ll go higher, frankly. We’re looking at the middle class and we’re looking at jobs.”

For corporate taxes, the President repeated his preference for cutting the corporate-income tax rate from 35 percent to 15 percent — though other Republicans have questioned whether it’s possible to take it that low. “We want 15 percent rate because that would bring us low, not by any means the lowest, but it would bring us to a level where China and other countries are,” he said.

Time is growing short for legislative action on taxes in 2017, and the promise of a framework during the week of September 25 — a document that House Ways and Means Chairman Representative Kevin Brady (R-TX) described as the “core elements of tax reform” — comes as President Trump is focusing on trying to attract Democrats’ support.

Three Democratic senators joined the president for a White House dinner Tuesday, September 12 aimed at winning their support on a tax bill. The President had another meeting scheduled Wednesday, September 13 afternoon with a bipartisan group of moderate House members, the Problem Solvers. And he’s invited the Democratic leaders of the House and Senate, House Minority Leader Representative Nancy Pelosi (D-CA) and Senate Minority Leader Senator Chuck Schumer (D-NY), to dine with him at the White House on Wednesday.

While such details as the corporate tax rate and the tax brackets that would apply to individuals still unclear, Senator Joe Manchin (D-WV) who dined with the President Tuesday, September 12 said that the president is pitching tax relief for the middle class, not “a tax cut for the rich.”

Still, even amid the President’s bipartisan approach, lawmakers are laying the groundwork for getting legislation through the Senate without Democratic support.

Unblocking the Budget

House Budget Chairwoman Diane Black (R-TN) said Wednesday, September 13 it’s unlikely that the budget resolution will reach the House floor this month. Republicans have to agree on a 2018 budget resolution — a necessary step to unlock the procedural maneuver they intend to use to pass the tax plan with 50 votes in the Senate while avoiding any Democratic filibuster. The party controls only 52 of the chamber’s 100 votes.

Members of the conservative House Freedom Caucus have said they will not vote to pass a budget out of the House until they get more details on tax changes. Chairwoman Black said the outline coming from the so-called Big Six — the administration and congressional leaders who are shaping the tax framework — should help to assuage those members’ concerns.

If Congress follows Chairman Brady’s schedule and adopts a budget resolution by the middle of October, there will be 28 legislative days left on the House calendar in 2017. And Congress must act by Friday, December 8 to fund the government or face a shutdown.

Big Six

During a press conference last week, Chairman Brady, a member of the Big Six, would not confirm whether any specific decisions had been made and declined to offer a timetable for releasing details or marking up legislation. The other members of the Big Six are House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Senate Finance Chairman Orrin Hatch (R-UT), Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.

Speaker Ryan said the outline that’s coming this month would reflect agreement among the tax-writing committees in the House and Senate, and the administration. Subsequently, the committees will take feedback and write the bills in the weeks ahead.

“This is really the consensus of the tax writers themselves so that we’re working from the same page,” Speaker Ryan said during a press conference Wednesday, September 13. “The tax writers are going to take it from there on the details.”

Deficit Question

Senator Hatch was less committal on the content and timing of any new tax framework. “It looks to me like there will be” a document released during the week of September 25 that provides new details on the Republican tax plan, he told reporters on Wednesday, September 13. “But I’m not totally confident about that.”

In response to a question about whether Speaker Ryan will insist that a tax proposal balance its cuts with revenue raisers to avoid increasing the federal deficit, the Speaker said during an event Wednesday, September 13 that economic growth is more important than anything else. Republican Leaders Speaker Ryan and Majority Leader McConnell have both said previously that a tax plan should be revenue-neutral.

The Speaker also said during the press conference he would love to have the Democrats working with the GOP “but we’re going to do it no matter what.”

Meanwhile, achieving bipartisan support in the Senate may be difficult. Earlier this year, 45 of the 48 Democratic senators signed a letter that set three conditions for supporting tax legislation: that it not add to the deficit, that it not increase the burden on the middle class and that it go through the regular order process in Congress.

 

Senate Continues to Negotiate Defense Authorization Bill

Armed Services Committee Chairman John McCain (R-AZ) negotiated an agreement for the Senate to adopt a substitute (a modified version of Amendment No. 1003) that rolls in more than 100 agreed-upon amendments. Senators will then vote on cloture of the underlying bill (H.R. 2810) and passage.

Among the amendments that have made the cut are Senator Joe Donnelly’s (D-IN) amendment (offered as No. 857) that would require a North Korea strategy. Senator Donnelly’s amendment would give the Trump Administration 90 days to develop a plan that covers the security threat posed by North Korea, the economic and political relationships between North Korea, China and Russia. It would require the plan to identify the resources needed to achieve these goals and any currently existing gaps in capabilities.

An amendment (offered as No. 558) by Senator Cory Gardner (R-CO) also made the cut. It would request a report from the Pentagon on the capabilities and activities of Islamic State terrorists and other extremist groups in Southeast Asia. The report would have to include how many Islamic State fighters are in southeast Asia; how many are expected to return to that region after fighting in the Middle East in Iraq and Syria; and a detailed assessment of IS capabilities in the Philippines, Indonesia and Malaysia.

The Senate’s version of the National Defense Authorization bill would authorize $700 billion for national security spending in fiscal 2018, which starts Sunday, October 1. It would permit $60 billion of war spending, exceed President Trump’s budget request and bust through defense spending caps set in the Budget Control Act (Public Law 112-25).

The legislation would allow the purchase of as many as 94 F-35 jets, 24 more than requested by the President and seven more than sought by the House’s defense authorization measure. It would also give the U.S. Navy authority for only one Littoral Combat Ship instead of the three sought by the House. While the President’s budget called for one of the controversial ships, the Navy has indicated it supports adding a second of the vessels.

 

In the Administration

DACA Deal May be Close

President Trump said he’s close to a deal with congressional Democrats to permanently safeguard from deportation about 1 million immigrants brought illegally to the U.S. as children — people whose protections he promised as a candidate to end on his first day in office. He also said that a deal to reinstate the protections, known as Deferred Action for Childhood Arrivals (DACA) and established under President Barack Obama, would not include money to construct a wall on the border with Mexico.

“We’re working on a plan for DACA. People want to see that happen,” President Trump told reporters as he left the White House to visit hurricane-ravaged Florida. “You have 800,000 young people brought here, no fault of their own, so we’re working on a plan.” The plan would include “massive border control,” he said, but money for his promised border wall “will come later,” he said.

Senator John Cornyn (R-TX), the Senate’s No. 2 Republican leader, said that the basic outlines of a plan combining a DACA fix and border-security is a good starting point and has potential.

 

White House Regulatory Office Fully Staffed 

The White House Office of Information and Regulatory Affairs (OIRA) is now fully staffed with four political appointees to help Administrator Neomi Rao fulfill the president’s deregulatory agenda.

OIRA, an agency within the Office of Management and Budget (OMB), reviews all significant federal regulations before executive branch agencies release them, and therefore plays a key role in shaping the regulatory policies of the Trump Administration. Rao won Senate confirmation July 10 in a 54-41 vote to be President Trump’s chief regulatory officer and leader of the administration’s efforts to deregulate and simplify rules. Since then, Rao has hired or retained four senior staff officials from a variety of backgrounds who bring differing perspectives to the regulatory debate.

“I am grateful to have such talented individuals working with me at OIRA,” Administrator Rao said in a statement. “They bring a variety of perspectives to the important project of regulatory reform as well as to the ongoing work of regulatory review and information policy. We’ve had a smooth transition and integration with our experienced and excellent staff.”

 

Power Plants Get Two-Year Reprieve for Parts of Wastewater Rule 

Power plants won’t have to meet new limits until 2020 on toxic wastewater that comes from using air pollution control systems and transporting bottom furnace ash, the Environmental Protection Agency (EPA) announced Wednesday, September 13.

The EPA said it was postponing by two years compliance dates that would be required of more than 1,000 power plants nationwide, as it reconsiders how strictly it should limit those two sources of wastewater.

The postponement, requested by electric power utilities, applies to new Obama-era limits on wastewater generated by transporting bottom ash and by operating flue gas desulfurization (scrubber) units used to capture sulfur dioxide emissions from burning petroleum coke and coal.

Bottom ash transport wastewater refers to the water that power plants use to collect, cool, and convey ash and other slag from the bottom of a boiler to other parts of the utility for treatment.

These two sources of wastewater would make up 87 percent of the toxic pollutants removed by power plants, if the agency had chosen to implement the 2015 Obama Administration rule as finalized. The agency’s final unpublished rule follows public comments submitted on a proposal to postpone the 2015 rule’s compliance deadlines for all six categories of wastewater containing arsenic, selenium, nitrates, mercury, zinc, and other pollutants that power plants nationwide discharge. The rule will take effect upon publication in Federal Register.

Four Other Waste Streams Unaffected

The compliance deadlines for the two waste streams will be pushed back to January 1, 2020. The rule’s deadlines for the four other sources of toxic wastewater—fly ash, mercury controls, gasification, and coal ash landfills—will still start January 1, 2018.

A national industry group representing power plant operators, including subsidiaries of Ameren Corp. and American Electric Power, sought a deadline extension because the EPA is revising parts of a 2015 rule setting effluent limits for technology they would be required to use to treat the wastewater (RIN: 2040-AF14). The industry had pushed for the rewrite, arguing that the EPA used outdated and incomplete data to set standards for these two waste streams.

Delay Expected

Environmental groups opposed to the agency’s decision to rewrite the 2015 rule weren’t surprised by the postponement. They already are involved in suing the EPA over its initial decision to reconsider the rule without public comment.  “EPA has chosen to delay two of the most significant sources of toxic pollutants,” Casey Roberts, a senior attorney with Sierra Club, stated.