Washington Bulletin 9/25

September 26, 2017
Washington Update

On Capitol Hill

House to Prepare for Next Hurricane Supplemental, Ryan Says 

House Speaker Paul Ryan (R-WI) said he and lawmakers from both parties will continue assessing damages caused by this month’s hurricanes and prepare to move another disaster aid package in October.

Speaker Ryan said he cannot rule out the possibility Congress may be looking at more than one multibillion-dollar relief package to augment the $15.25 billion initial relief measure already passed this month after Hurricane Harvey.

“I anticipate there will be more than one piece of legislation moving through Congress, but right now it’s just short-term emergency needs,” Speaker Ryan said. “We’re waiting to hear from the [Trump] Administration because they’re totaling up what’s going on in Florida and Texas. We’ll see what’s the story in Puerto Rico.”

The House Speaker said the Federal Emergency Management Agency (FEMA) is covered for funds for the time being. However, funds appropriated after Harvey are seen as only a down payment on what will be needed to help Texas recover and will not be sufficient to also address damages caused by hurricanes Irma and Maria.

At present, FEMA and other agencies are drawing money provided by the $15.25 billion “emergency” supplemental (H.R. 601) for fiscal year 2017. The package provided $7.4 billion for FEMA’s Disaster Relief Fund, $7.4 billion for the Housing and Urban Development Community Development Fund, and $450 million for the Small Business Administration’s Disaster Loan Program.

Senate Majority Whip John Cornyn (R-TX) said there will need to be multiple supplementals to address the extensive damage seen so far this fall.

“We’ll go back to Congress in October and move at least two more relief packages for Texas and Irma and other disasters around the country,” Senator Cornyn said at a brief press availability with Speaker Ryan.

“Obviously this is about short-term, and mid-term and long-term, as the speaker said. And we’re committed all of that,” Senator Cornyn said.


Republican’s Latest Healthcare Repeal and Replace Attempt: Graham-Cassidy Health Amendment to H.R. 1628

The Affordable Care Act (ACA) funding streams would be replaced with a state block grant system under the latest Senate amendment to H.R. 1628, the vehicle for Republicans’ Affordable Care Act repeal efforts through reconciliation.

The amendment would provide $1.18 trillion over seven years for a block grant program based on funds provided to states for the ACA’s Medicaid expansion enrollees, premium tax credits, cost-sharing reduction payments, and Basic Health Program. States could waive some insurance regulations as part of the block grant program.

Other changes to the health-care law and Medicaid would be similar to those under the “Better Care Reconciliation Act” (BCRA) that the Senate rejected in July. Those would include:

  • Ending the Medicaid expansion for new enrollees and the increased federal funding for that population beginning in 2020. BCRA would have phased out the additional funding through 2023. States also could impose work requirements on certain Medicaid recipients.
  • Imposing a per-person cap on traditional Medicaid funding, though with different growth rates than BCRA, such as maintaining the medical component of the consumer price index (CPI-M) after 2024 for the elderly and disabled. The proposal also would allow states to elect to receive funding through a Medicaid block grant program instead.
  • Repealing the premium tax credits for lower-income exchange enrollees and the cost-sharing reduction payments to insurers beginning in 2020.
  • Eliminating the individual and employer mandate penalties.
  • Repealing the medical device tax and reducing taxes related to health savings accounts (HSAs). Other ACA taxes and fees would be maintained, unlike BCRA.
  • Providing $25 billion over 2019 and 2020 for a reinsurance program that would provide funds to insurers to help address market disruption and urgent health care needs. BCRA would have provided $50 billion over four years.
  • Allowing HSAs to be used for some insurance premiums and allowing more people to purchase catastrophic health coverage.
  • Blocking federal funding for entities — such as Planned Parenthood — that provide abortions.

Block Grant Program

Block grant funding would be provided for calendar years 2020 through 2026, starting with $146 billion and ending with $190 billion. The 2020 appropriation would include a $10 billion reserve fund for states that experience a shortfall in federal funding. An $11 billion contingency fund would be created allowing additional funding in 2020 and 2021 for low-density states or states that haven’t expanded Medicaid.

States could use the funds for a variety of purposes, such as helping high-risk individuals purchase coverage, establishing a reinsurance program to stabilize premiums and promote participation in the individual market, providing payments to health care providers, or reducing out-of-pocket costs for those in the individual market.

Each state’s allotment would be based on its previous ACA funding and percent of low-income beneficiaries between 50 percent and 138 percent of the poverty line, when taking into account a five percentage point adjustment under current law.

State funding would be adjusted for clinical risk factors for low-income individuals and could also be adjusted for other population factors such as demographics and income.

Starting in 2024, allotments would be reduced to account for individuals enrolled in a plan that has an actuarial value equal to those required under the Children’s Health Insurance Program (CHIP). The actuarial value is the portion of health costs covered by the plan and is approximately 70 percent under CHIP. Silver plans in the ACA exchanges also typically have an actuarial value of 70 percent.

The block grant would be provided through CHIP and subject to some restrictions on funding under that program, such as a prohibition on providing payments to cover abortion and a requirement for individuals to provide citizenship documents, such as a passport, for eligibility purposes.

ACA Rule Waivers

States could request waivers from the following ACA insurance rules in the individual market through the grant program:

  • Restrictions on premium rate variation, except based on sex or a Constitutionally protected class. The ACA generally limits rate variation to location, age, and tobacco use, meaning rates can’t take into account factors such as gender or health status.
  • Restrictions on insurers requiring an individual to pay a higher premium or contribution than similarly situated individuals based on health status as a condition of enrollment. The ACA prohibits eligibility discrimination based on health status.
  • Requirements that insurance coverage include certain benefits. The ACA requires plans to include 10 essential health benefits, such as emergency services, pregnancy care, and prescription drugs.
  • Requirements that insurers provide a rebate to enrollees if they don not spend a specified percentage of premium revenue on health costs. The ACA requires insurance companies to spend at least 80 percent on health costs, known as the medical loss ratio; the rest can be used for administrative costs.

Waivers would apply to coverage provided by an insurer that receives funding from the state through the grant program and to individuals who receive direct benefits from the grant program.

As part of their applications for grant funding, states would have to explain how they would maintain access to adequate and affordable coverage for individuals with pre-existing conditions if they receive a waiver.


President Trump Shames GOP Senators as Health Bill Hangs by Thread

With the latest Republican-only Affordable Care Act (ACA) repeal proposal hanging by a thread, President Donald Trump chided lawmakers who had announced their opposition or are on the fence.

The President directed tweets at Senators Rand Paul (R-KY) and John McCain (R-AZ). Both have said they will oppose the bill, meaning one more committed “no” will sink the legislation. He also targeted Lisa Murkowski (R-AK), who has not committed to a position so far but voted no on a previous replacement measure. “Alaska had a 200% plus increase in premiums under ObamaCare, worst in the country. Deductibles high, people angry!” the President published.

On Friday, September 22, Senator McCain said in a statement that he “cannot in good conscience vote for the Graham-Cassidy proposal.” Republicans and Democrats could do better by working together “and have not yet really tried,” Senator McCain said.

Senator McCain was the second Republican to oppose the measure, joining Senator Paul. Senator Susan Collins (R-ME) said Friday, she’s leaning against it, according to a newspaper in her home state of Maine. Senate Republicans can afford to lose no more than two members of their 52-48 majority and pass the bill.

The Republican drive to gut the Affordable Care Act is using a dramatically short-circuited process that seeks to replace President Obama’s landmark health law with another introduced just two weeks ago.

Senator Majority Leader Mitch McConnell (R-KY) has said he intended to hold a Senate vote next week before a Saturday, September 30 deadline to use a fast-track procedure allowing a simple majority vote.


Senate Passes FY18 Defense Authorization Bill

By an 89 to 8 vote, the Senate passed legislation that authorizes $700 billion for national security spending in fiscal year 2018 and permits $60 billion in war spending. Under the legislation, defense programs would be authorized to receive $692.1 billion in discretionary funding under the fiscal 2018 defense authorization measure, S. 1519, approved by the Senate Armed Services Committee. The measure could be offered as a substitute amendment to the House-passed bill, H.R. 2810.

The authorization primarily covers defense activities at the Defense Department (DOD), as well as some programs at the Energy and State departments.

The authorization would include $640 billion in base discretionary funding, which would exceed the $549 billion defense spending cap under the 2011 Budget Control Act, Public Law 112-25. The bill also would authorize $60.2 billion in Overseas Contingency Operations (OCO) funding that doesn’t count against the cap on defense spending. The House-passed measure would have authorized $74.6 billion in OCO funds.

Other defense programs, including at the Justice Department, are not covered by the measure yet would also count against the cap.

The following table shows the major authorization levels in the measure and the administration’s fiscal 2018 budget request.

Program (amounts in billions) Bill Request Vs. request
Defense Department (base) $610.9 $574.7 +$36.2
Atomic energy programs (base) $21.0 $20.4 +$0.6
Overseas Contingency Operations $60.2 $64.6 -$4.40

The legislation also would authorize about $7.85 billion in discretionary funding that isn’t within the jurisdiction of the Senate Armed Services Committee.


Tentative U.S. Budget Deal on Taxes Gets Nod From Certain Senators

Senators Bob Corker (R-TN) and Pat Toomey (R-PA), two Republican members of the Senate Budget Committee, said they have agreed to a tentative deal to craft a budget that would allow “headroom” for a significant tax cut, though they didn’t specify the size of the reduction.

Senators Corker and Toomey had disagreed over allowing a budget that would add to the deficit. On Tuesday, September 19 they hammered out a potential path forward with Senate Majority Leader Mitch McConnell (R-KY): a budget resolution that will allow for a tax cut, according to a joint statement from Senators Toomey and Corker.

Senator Corker, a self-described deficit hawk, said he will still insist that any tax bill pay for its cuts through economic growth, as determined by valid economic modeling. While he was silent on the size of the cuts, another Republican member of the budget panel, Senator Ron Johnson (R-WI), said the group is considering a budget allowing for tax reductions amounting to $1.5 trillion.

If the panel accepts a budget plan that would add to the long-term deficit, at least some of the cuts in any tax-overhaul bill that follows the budget may have to be only temporary. That is because Senate leaders want to use a procedure that would protect the tax legislation from a Democratic filibuster — and that procedure requires that the legislation can’t add to the long-term deficit.

The agreement represents a pronounced departure from Senator McConnell’s position earlier this year. Senator McConnell announced in May that a tax overhaul would need to be revenue-neutral — balancing cuts with provisions that broaden the tax base — and cannot add to the nation’s “alarming” debt.

“While each member of the caucus will have to make their own decision, I believe our agreement gives the tax writing committees enough headroom to achieve real tax reform that eliminates loopholes and lowers tax rates for hardworking Americans,” Senator Corker said in a joint statement with Senator Toomey released the evening of Tuesday, September 19.

Senator Toomey said in the statement that the plan they have agreed to will give the committee the leeway “to write a pro-growth tax plan that reforms the code, causes the economy to surge, and ultimately results in reduced federal budget deficits.”

Senator Corker had said earlier Tuesday, September 19 that he would not specify a number for the tax cuts until he had spoken to more committee members.

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. The party controls only 52 of the chamber’s 100 votes. White House advisers and congressional leaders have promised a tax framework outlining more details the week of September 25, which may help to assuage members of the conservative House Freedom Caucus, who have said they won’t vote to pass a budget out of the House until they get more details on tax changes.

Senator Mike Crapo (R-ID), a member of the tax-writing Finance Committee, said Monday, September 18 he wants a tax cut that’s “as big as we can get” within the budget window, though he declined to put a number on it. He said it “depends on what kind of dynamic impact a tax relief package can have, but I want it to be as big and bold as we can get.”

Another committee member, Senator Bernie Sanders (I-VT), who caucuses with the Democrats, said senators should discuss who’d get the benefits of a tax cut before discussing its size.

“My strong guess is that Republicans want to give a tax cut to billionaires which is exactly what we don’t need,” Senator Sanders said in an interview.

Senate Tax Chairman Splashes Cold Water on Unified GOP Plan

Senate Finance Chairman Orrin Hatch (R-UT) is downplaying the prospect that the White House and congressional Republican leaders will be able to deliver a unified framework for tax legislation next week, as other officials have promised.

“I can’t say that they are” going to be able to produce a plan, Hatch told reporters Wednesday. “All I can say is that they are trying.”

Senator Hatch expressed similar uncertainty on Wednesday, September 13, hours after House Ways and Means Chairman Kevin Brady (R-TX) told Republicans that party leaders would unveil a consensus document on a tax overhaul framework during the week of September 25. White House budget director Mick Mulvaney and Treasury Secretary Steven Mnuchin have also said a plan is coming that week, although no details have emerged yet.

Twice since then, Senator Hatch made clear that his panel will make its own decisions on what a tax bill looks like. “The group — some have deemed us the Big Six — will not dictate the direction we take in this committee,” he said in opening remarks at a tax hearing on Thursday, September 14. “Any forthcoming documents may be viewed as guidance or potential signposts for drafting legislation. But, at the end of the day, my goal is to produce a bill that can get through this committee.”


In the Administration

Trump’s Indefinite Travel Ban Opens New Stage in Legal Fight

President Trump restricted or suspended travel to the U.S. from eight countries, adding North Korea and Venezuela, while subtracting Sudan, from his earlier ban on travelers from six Muslim-majority nations.

“I must act to protect the security and interests of the United States and its people,” the President wrote in Sunday, September 24 proclamation. The move came as the original order, which had been limited by court challenges, was set to expire. Speaking to reporters earlier, President Trump said “the tougher, the better” about the restrictions, which will remain in place until the countries are found to have changed their behavior. During his presidential campaign, President Trump spoke often of “extreme vetting” of those wanting to enter the U.S.

The new restrictions impact travel to varying degrees from Iran, Libya, Somalia, Syria and Yemen, all of which were on the original list. The U.S. will also now restrict or ban travel from Chad, North Korea and Venezuela. Each of the countries will be subject to its own set of restrictions, as set out in Sunday’s order. Sudan is no longer on the list.

The Department of Homeland Security would have the authority to add or remove travel restrictions on countries as conditions change, a senior administration official said.

New parts of the restrictions will take effect Monday, October 18, a grace period that may prevent the kind of mass confusion seen at airports in the U.S. and abroad after the initial iteration of the travel ban took effect immediately. Other limitations took effect Sunday, September 24.

“The State Department will coordinate with other federal agencies to implement these measures in an orderly manner,” Secretary of State Rex Tillerson said in a statement. The previous travel ban was scheduled to expire on Sunday after the Supreme Court’s ruling in June, which tailored the ban to only include those who have no “bona fide relationship” to the U.S.

DHS Study

Acting Homeland Security Secretary Elaine Duke sent President Trump recommendations for entry restrictions and additional visa requirements tailored to shortcomings in the information each country shares with the U.S. and an assessment of the risk of terrorist infiltration the nation poses, administration officials announced on Friday, September 22.

“The restrictions announced are tough and tailored, and they send a message to foreign governments that they must work with us to enhance security,” Acting Secretary Duke said in a statement Sunday, September 24.

In the order, the President said the Secretary of Homeland Security assessed that Iraq also did not meet requirements for identity-management protocols and other risk-mitigating factors — but that entry restrictions weren’t warranted given the country’s ties to the U.S. and efforts to combat terrorists.

President Trump’s previous efforts to restrict travel to the U.S. prompted court challenges, mass protests and criticism from corporate leaders. He rescinded his first travel ban after it was halted by a judge and replaced it with a new executive order on Monday, March 6, which was challenged at the Supreme Court. That order was set for a Sunday, October 10 argument at the Supreme Court. It’s unclear how the new restrictions issued by President Trump will impact that case, which also covers a separate provision of the order that suspends refugee admissions until Sunday, October 24.

Justice Department spokeswoman Sarah Flores said last week that government lawyers would continue to “vigorously defend” the travel restrictions. A Trump Administration official said an updated brief will be filed with the Supreme Court Sunday.

Tensions Inflamed?

The travel restrictions could further inflame geopolitical tensions around the world as President Trump is engaged in heated rhetoric against the governments of Iran, North Korea and Venezuela.

The U.S. notified all countries in July of “baseline” standards they would need to meet to avoid travel restrictions, said Miles Taylor, a counselor to Duke at the Department of Homeland Security. Several countries didn’t respond to the U.S. requests for more information, he said. “Some countries didn’t even have the courtesy to say ‘fly a kite’,” Taylor said. “We’re talking about countries that were willfully non-compliant and refused to engage with the United States.”

With Venezuela and North Korea now on the list, President Trump’s ban may no longer be tagged as a de-facto ban on Muslims entering the U.S., as he pledged to do during his campaign. But that wasn’t the reason the two countries were added, a White House official stated.


UN `Club’ Trump Derided Forges Fresh Alliance on Key Issues

President Trump, who derided the United Nations as a “club for people to get together, talk and have a good time” after his election, is surprising veterans of the global body by leaning on it to help carry out his foreign policy agenda.

From pushing the Security Council to tighten sanctions on North Korea to forging a partnership with Secretary-General Antonio Guterres over cutting troubled peacekeeping programs, the Trump Administration and UN officials have found overlapping areas of agreement that many analysts didn’t expect.

“The Korean crisis has focused U.S. attention on the value of the Security Council,” said Richard Gowan, a UN expert with the European Council on Foreign Relations and author of a new report on Trump and the UN. “The irony is that the Trump Administration now really needs a functional UN to help it deal with the biggest threat on its agenda.”

The annual UN General Assembly, which is drew almost 200 world leaders to New York last week, will put that relationship to the test. European leaders pressed President Trump, who addressed the global body for the first time on Tuesday, September 19 to recommit to a 2015 Iran nuclear deal that he’s threatened to walk away from. And another North Korean missile launch or nuclear blast could quickly force the President to choose between more diplomacy or a devastating military conflict.

President Trump will call on world leaders to step up efforts to curtail North Korea’s nuclear program, said Kellyanne Conway, senior adviser to the president. “North Korea is not a distinctly American problem, it is the world’s challenge,” Conway said Monday, September 18. “The president will call upon our allies and others to come together to push back against a nuclear capable North Korea.”

Yet President Trump was muted in his enthusiasm as he exited the UN on the first day of the General Assembly and offered reporters a riff on his “Make America Great Again” campaign slogan. “The main message is ‘make the United Nations Great.’ Not again. ‘Make the United Nations great,’” the President said. “Such tremendous potential, and I think we’ll be able to do this.”

While the State Department is taking the fewest number of diplomats to the gathering in more than a decade, President Trump is bringing a coterie of top aides and spending four full days in New York, about double the time former presidents Barack Obama and George W. Bush typically spent at General Assembly meetings. That’s in large part because U.S. officials see an opportunity to make progress in so many key areas.

“It’s a new day at the UN,” Nikki Haley, the U.S. envoy to the UN, said Friday, September 22 in Washington. “It’s not just about talking, it’s about action.”

The cooperative relationship — at least in a few key areas — can be attributed to the relationship forged between two seasoned politicians: Haley, a former South Carolina governor, and Guterres, a former Portuguese prime minister who, like President Trump, took office in January. While many UN officials watched with horror as the Trump Administration vowed to slash spending on foreign aid, including the UN, by about one-third, Guterres and Haley found a way to target troubled peacekeeping efforts. Those programs, in countries including the Democratic Republic of Congo and South Sudan, had long been criticized for not protecting civilians and, in some cases, sexually exploiting the very populations they were meant to defend.

President Trump on Monday, September 19 called for “clearly defined” goals and metrics for every UN peace-keeping operation. He told a U.S.-organized meeting of UN diplomats on reform efforts that “bureaucracy and mismanagement” are preventing the organization from realizing “truly noble goals.”


WTO Upgrades Forecast for Global Trade Growth to 3.6% in 2017 

World trade is on course to grow by 3.6 percent in 2017 due to increased trade flows in the U.S. and Asia, the World Trade Organization (WTO) said Thursday, September 21.

The revised estimate is substantially better than the WTO’s previous forecast in April, when the Geneva-based trade body said global trade growth would likely expand by 2.4 percent this year.

WTO Director-General Roberto Azevedo said the improved outlook for trade is “welcome news, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery,” according to a statement.

“These risks include the possibility that protectionist rhetoric translates into trade restrictive actions, a worrying rise in global geopolitical tensions and a rising economic toll from natural disasters,” he said.

The WTO forecast for 2017 surpassed 2016’s meager 1.3 percent growth rate, and if achieved would exceed the 2.7 percent rate registered in 2014 and the 2.6 percent rate logged in 2015. Intra-Asian demand for Chinese products was red-hot in the first half of 2017, and U.S. investment benefited from the partial recovery of oil prices this year, the WTO said.

But the rapid pace of trade growth is unlikely to be sustained, and the WTO said its estimate for 2018 would likely fall to 3.2 percent. Shifts in monetary policy in the U.S. and Europe could negatively affect trade growth in developing countries in 2018, the WTO said. In addition, the WTO said it expects China to rein in its financial expansion and credit policies next year in order to prevent its economy from overheating.