The Washington Report – December 12, 2014

Best,

Joyce Rubenstein and the Capstone Team (John Rogers, Alan MacLeod, Steve Moffitt, Diane Rogers, Erik Oksala, Kate Venne, Kathryn Wellner and Ross Willkom)

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DAY OF DRAMA Politico: “In a big win for House Republicans and President Obama, the House passed a $1 trillion-plus funding bill. The final vote … after a day of behind the scenes arm-twisting and vote counting, was 219 to 206. ART OF COMPROMISE NYT: “Mr. Boehner built a coalition of 162 Republicans and 57 Democrats, a rare achievement for a Congress that has often operated along strict party lines. Congress also passed a two-day funding measure to give the Senate time to pass the legislation. … The adopted measure funds the government through Sept. 30, 2015. ON TO THE SENATE “The Senate could pass the measure as soon as [today] if the two biggest opponents of the measure, Democrat Sen. Elizabeth Warren and Republican Sen. Ted Cruz, consent. The Senate will first finish work on the NDAA before it takes up the government spending bill, which would require a unanimous consent agreement. If Senate Majority Leader Harry Reid cannot forge a UC agreement today, the government spending bill will likely be taken up on Monday.”

PELOSI NOT HAPPY Thursday’s results were a major blow to Pelosi, who had led Democrats in hours long closed-door meeting where they bashed the bill and counted on its defeat to help her recover politically following the Democratic debacle on Election Day. But 57 Democrats crossed the aisle to vote with 162 Republicans to help pass the measure.”

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SHUTDOWN AVERTED MorningD: “First things first: Congress avoided a government shutdown. … The vote was significant because it prevented the House from resorting to its backup plan of approving a several-month CR instead of an actual appropriations bill for the Pentagon and other federal agencies, which would have forced the military to wait even longer to start new initiatives planned in its fiscal 2015 budget.

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IT WAS AN IMPRESSIVE FEAT CONSIDERING LIBERALS VOTED NO Politico: “The White House’s aggressive push to salvage a spending bill on Capitol Hill left liberal lawmakers feeling burned by President Barack Obama – and raised significant doubts about their desire to cooperate heading into next year’s Republican takeover of Congress. … Thursday’sdeadline drama offered no signal of party unity, only fresh reminders of the post-election divisions between a president who’s looking to govern during his last two years in office and a newly invigorated populist wing of the party, led by Sen. Elizabeth Warren (D-MA).” SO DID CONSERVATIVES “Conservatives began the lame-duck session enraged over President Barack Obama’s executive actions on immigration and hell-bent on unraveling the moves they saw as illegal, unconstitutional and just plain wrong. Now they’re ending the year frustrated at their own party’s leaders, who they think cut them out of the funding process and fumbled a chance to pick apart Obama’s immigration actions as soon as they were announced by not using the must-pass funding bill to undo it.”

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HOW WALL STREET WON Politico: “Wall Street’s success in using the year-end spending bill to weaken a provision of the 2010 financial reform law shows how it plans to wield its clout in the months ahead — slowly and methodically, piece by piece, leveraging the legislative process. The banks prevailed, showing that when it comes to rolling back Dodd-Frank, the financial-services industry is willing to play the long game. The Dodd-Frank provision in question – the so-called SWAPS PUSHOUT RULE – has been controversial since it was first put forward by former Senate Agriculture Committee Chairman Blanche Lincoln (D-AK) and big banks for years have worked to get rid of it or to at least water down its impact.WHAT’S THE PUSHOUT RULE? The Pushout Rule bans banks from making certain risky derivatives trades in units backstopped by a government guarantee and requires them to move those parts of their operation to separate affiliates.” GOVERNMENT BAILOUT … I MEAN ‘BACKSTOP’ The banking industry for years has railed against this section of the law as impractical and ill-conceived, but advocates of tougher regulation say it is a necessary check on Wall Street banks’ penchant for taking big risks in the parts of their operations that enjoy government backstops, such as deposit insurance.” Wall Street’s strategy started with a stand-alone House bill (that had bi-partisan support) but this year, the focus shifted to working the issue more through the annual appropriations process, where must-pass bills can help carry policy provisions into law.”

SHERROD BROWN TPM: “The next ranking member of the Senate Banking Committee will be a populist and vigorous critic of Wall Street: Sen. Sherrod Brown. The Ohio Democrat will lead his party on the influential panel in the new Republican-controlled Senate that convenes on January 3, he announced on Friday.”

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HIDE YOUR CHECKBOOKS Politico: “A provision tucked deep inside the $1.1-trillion spending bill … would dramatically increase the amount of money a single rich donor could give to national party committees each year – from $97,200 to $324,000 or more.

ARE WE WITNESSING THE DEATH OF McCAIN-FEINGOLD? The Fix: “… The ten-fold increase in donation limits left many Democrats up in arms, insisting this was the latest attempt by enemies of campaign finance reform to unravel the law spearheaded by Sens. John McCain and Russ Feingold last decade. Seeking answers on how much trouble McCain-Feingold might be in, Michael Toner, a former chairman of the FEC, Republican election lawyer and longtime advocate for less regulation of money in politics said, “McCain-Feingold is on life support.  Ever since Justice Alito replaced Justice O’Connor on the Supreme Court in 2006, the Court has chipped away at the McCain-Feingold law through a series of decisions invalidating key aspects of the law, including the Citizens United ruling which struck down restrictions on corporate independent expenditures and corporately financed electioneering communications aired in the final weeks before an election.  The last remaining pillar of the McCain-Feingold law was the soft-money ban barring the national political parties from raising and spending funds outside of the federal limits.  While the national political parties will continue to be prohibited from raising and spending corporate contributions, these new campaign finance provisions in the budget bill create the potential for the national parties to raise significantly more money from individuals – perhaps up to $50-$100 million more funds for the 2016 election.  The passage of these provisions also might create momentum for additional legislation to be enacted in the future further relaxing the contribution limits on political parties.”

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BYE-BYE BIRDIE “Before lawmakers could agree to a $1.1 trillion, last-minute deal to avoid shutting down the U.S. government, they first had to deal with a couple of birds. The result is a 1,603-page spending bill that includes a paragraph barring the Obama administration from approving endangered-species protections for two types of sage grouse, an imperiled, pheasant-like bird that is ruffling the petroleum industry’s feathers across the West by cohabiting on prime oil and gas land. Now environmentalists are squawking.”

DIALING BACK SCHOOL NUTRITION The Hill: “The CRomnibus contains language that would allow states to exempt struggling districts from having to offer all whole grain products and eases requirements for schools to reduce sodium levels. Health advocates are blasting provisions in federal funding legislation that are seen as dialing back school nutrition standards, even as the White House seeks to downplay the riders as “minor adjustments” to the first lady’s signature policy.”

WAIT. WHAT? GOP JUST NIXED PART OF OBAMACARE TPM: “The CRomnibus … included a GOP-proposed change to an Obamacare program long loathed by Republicans. A House aide confirmed … that Republican staffers requested the change to the so-called risk corridor program, which is designed to keep premiums stable by making payments to insurers if they lose more money than expected in the law’s first few years. Some health policy wonks picked up on the language, but it received negligible attention compared to the campaign finance and Dodd-Frank provisions that nearly derailed the spending bill in the House on Thursday night. The way the risk corridor program works: Insurers estimate in advance how their insurance pools will look and if in the end they’re significantly better than estimated, they pay money into the program; if they’re significantly worse than estimated, they are paid money by the program. The CRomnibus, which funds most of the government through the next year, prohibits the Health and Human Services Department from transferring funds from other sources to fund the program. The practical impact, one policy expert said, is that HHS can therefore only use money brought into the program to make payouts, effectively making it revenue neutral.”

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OBAMA LOSING GRIP ON THE DoD BUDGET MorningD: “President Barack Obama is losing some of the control over the defense budget that his administration clawed away from top military commanders early in his presidency, with the service chiefs and Congress once again conspiring to undo tough spending decisions made by the White House and the Pentagon. The result: an omnibus spending package for this fiscal year that includes money to buy lots of weapons the Pentagon didn’t request but top commanders signaled they wanted anyway.SOME HISTORY ON ‘UNFUNDED REQUIREMENTS Military commanders have long provided Congress with lists of “unfunded requirements” – items they want that didn’t get included in the Pentagon’s annual budget submission. Then-Defense Secretary Robert Gates pushed back on “unfunded requirements” early in Obama’s tenure to prevent the service chiefs from bypassing his office as he sought to rein in a defense budget that had ballooned during the George W. Bush administration. By 2012, unfunded requirements – sometimes called “wish lists” – had all but vanished, as Congressional Quarterly reported at the time. This year, though, marked the return of the lists, which provided a roadmap for lawmakers and industry lobbyists to subvert the White House’s spending plan for the Pentagon. AND SUBVERT THEY DID Case in point: The omnibus spending deal includes $1.5 billion for 15 Boeing EA-18G Growlers that the Pentagon hadn’t requested – but were on the Navy’s unfunded requirements list. The bill includes two extra Air Force F-35 fighter jets that were on the service’s list. And it includes funding boosts for a number of Army vehicles that were on unfunded requirements lists, including the Stryker armored fighting vehicle made by General Dynamics and the Bradley Fighting Vehicle made by BAE Systems.”

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2015 NDAA Politico: “The Senate is set to pass the policy bill today. 53 YEARS Like last year, the Pentagon’s going to get what it wants, albeit in a last-minute Capitol Hill scramble: a defense authorization bill – for the 53rd straight year – and an appropriations measure. Funding for the Defense Department remains a bipartisan priority and the annual NDAA is still a must-pass measure, but both are increasingly getting tied up in larger partisan spats. And next year, things will be even more difficult since there’s no clarity on where the Pentagon’s topline spending will end up. BUBBLE THOUGHTS FOR 2015 “The big questions: Can Hill Republicans and Democrats agree to another budget deal, like the Murray-Ryan agreement, to stave off further rounds of sequestration in fiscal 2016 and beyond? How will the GOP takeover of the Senate play into this? And would the president veto a Republican spending bill that increased the defense budget but busted the Budget Control Act caps without raising revenues?”

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MILITARY FORCE FOR ISIL FIGHT “The Senate Foreign Relations Committee narrowly approved on Thursday a measure to authorize the use of military force in the fight against the Islamic State after some heated debate over how restrictive it should be. The 10-8 vote was along party lines, with Democrats supporting the measure and Republicans opposing it. No floor debate is expected in the Senate, nor will the House take up the issue during the last days of this lame-duck session, leaving it for the new Republican-controlled Congress that will be seated in January.”

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THE VITTER AMENDMENT IS BACK Washington Post, “More Senate staff members stand to be forced out of the health plan for federal workers under a policy adopted Wednesday by Senate Republicans. The Senate Republican Conference accepted a resolution from Sen. David Vitter (R-LA) to add to the number of Capitol Hill staff already made ineligible for the Federal Employees Health Benefits Program because of the Affordable Care Act. The resolution makes it the policy of Senate Republicans to make staff members they employ ineligible for the FEHBP ‘regardless of whether they work in a member’s personal office, committee office, leadership office, the cloakroom or any other office.'”

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