Something REALLY special this week … Capstone’s analysis of the state of play in Washington DC from our DC Team, combined with my usual Washington Report reporting.
As has become the custom within the Beltway, Congress somehow figured out how to jam a month’s worth of work into a week.
As our nation enters a week of giving thanks and Congress (thankfully) is taking a week-long breather, it is an appropriate time to offer a summary of where the significant federal policy issues of the day stand, and more importantly the long list of to-do’s and must-do’s for Congress to face when they return for the final (scheduled) three weeks of the First Session of the 115th Congress.
Wishing you and yours a Happy Thanksgiving!
House Speaker Paul Ryan and his fellow majority party leaders in the House successfully shepherded the first critical step of tax legislation through the House this week. Senate tax writers successfully reported their version of a tax rewrite out of Committee on Thursday.
However the progress made this week disguises the fraying political rope that binds the effort. The House-passed bill is DOA in the Senate given budget rules in the Upper Chamber that prevent adding to the federal deficit after 10 years. To meet that constraint, Senate GOP leaders have introduced a plan that sunsets individual income tax breaks while making the corporate cut and international changes permanent. Additionally the Senate bill repeals a key tenet of the Obamacare law – the individual mandate. While this helps as a down payment for the legislation, it would result in roughly 4 million fewer people being covered by insurance in the first year, with that number rising to 13 million fewer people by 2027.
In response to these changes Sen. Ron Johnson (R-WI) emerged this week as the first Republican Senator to say he’s opposed to the Senate tax proposal as it stands, complaining that it would disadvantage pass-through businesses in relation to corporations. And Republican Sen. Susan Collins (R-ME) sounded the alarm against including the Obamacare individual mandate’s repeal in the tax bill. Given that Republicans intend to pass the legislation without the support of Democrats, the GOP cannot afford to lose another vote – and that’s before a new Senator is seated from Alabama (in a special election on Dec. 12th).
However, those are not the only challenges the Senate faces in passing their own version of the bill.
Senate Republicans may also face a problem of paying for their bill without stripping funding from Medicare and other provisions including farm subsidies. In a law known as Paygo, Congress is required to make immediate, across-the-board spending reductions to many mandatory programs for any bill that reduces taxes and doesn’t fully offset them with revenue increases elsewhere. The GOP tax cut plan would add $1.5 trillion to the debt over the next decade. Under Paygo rules, the government would have to make $150 billion in mandatory spending cuts every year for the next 10 years. (that’s right, $150 billion, with a ‘b,’ every year for the next 10 years.)
The differences between the two chambers will have to be reconciled before either plan can become law — a goal they’ve set to accomplish before year’s end. Nonetheless, tax legislation must begin in the House — so the vote this week was critical to the effort. Combined with reporting the bill out of Senate Finance Committee, a few critical steps were made in making the tax bill law, even if in reality it may be further from becoming law than when the week started.
Photo Goes Viral
Politico “A photo Wednesday of Treasury Secretary Steven Mnuchin and his wife, Louise Linton, posing with a sheet of new $1 bills — the first notes bearing his signature — prompted a frenzy online. Some remarked that the pair resembled James Bond villains.”
Photo Credit, AP’s Jacquelyn Martin.
Quinnipiac Poll (Nov. 15, 2017)
“Do you Approve or Disapprove of The Republican Tax Plan?
Daunting 3-Week Sprint: To-Do’s and Must-Do’s
… from our DC Team
The slate of year-end issues that Congress is facing would be daunting for a legislative calendar in full, let alone three weeks. And while tax legislation will continue to dominate headlines and take the political oxygen out of the Capitol dome, there are many issues that will be considered in part or in whole before Members recess for the winter break (scheduled now for December 15). Below is a brief rundown of some of the bills and issues that will be in the mix:
Current federal funding is authorized through December 8th. Given that the funding vote will likely be the last vote Members will make before they leave town, it’s a near certainty that an additional short-term funding bill will pass extending funding to the 15th and possibly as late as the 22nd. The final passage of a full year funding bill is not in doubt, it’s just a matter how much Congress would like to get done before they leave town.
For FY2018 funding, the House was able to pass each of the 12 appropriations bills, however the Senate was only able to pass 8 bills out of committee and none off the floor. Given the significant differences between the bills and the tight window, we understand that House and Senate appropriators have agreed in principle on final funding levels. Staff is ready to present those levels and variable options for passing those bills (i.e. as one omnibus, several minibus’s, or potentially a year long CR) when the time is right.
The National Defense Authorization Act (NDAA) has passed both the House and Senate and a conference agreement has been reached. As of this writing, the House has passed the final bill; which only leaves Senate approval as the final hurdle to clear.
In September, after cancelling the Dreamer’s program (Deferred Action for Childhood Arrivals – DACA) which provides a path to citizenship for young undocumented immigrants, President Donald Trump (in an amazing display of his ability to unintentionally govern) asked Congress to come up with a solution for the Dream Act. If lawmakers don’t do anything, the program will expire in March and more than 800,000 Dreamers will face deportation.
Democratic and Republican lawmakers in both the House and the Senate have called for a legislative fix for DACA by the end of the year, a move that remains uncertain despite signs of bipartisan cooperation earlier this year. House Speaker Paul Ryan has pushed back against attempts to tie DACA to other legislative priorities this year, saying earlier this month that it should be “considered separately” from end-of-year deadlines. However with the pressure to fix this before a rapidly approaching deadline, DACA is certainly on the table.
Health Care Subsidies
After months of failed Republican attempts to repeal the Affordable Care Act, the President directed the federal government to no longer pay subsidy costs for insurance bought through the Affordable Care Act. The loss of this subsidy would result in the cost of insurance going up for millions of Americans.
As a result, a bipartisan pair of senators proposed an approach and reached a deal designed to provide some stability to the health care law and to the millions of people who currently depend on the ACA. The agreement reached by Sen. Lamar Alexander (R-TN) and Sen. Patty Murray (D-WA) funds the law’s cost-sharing reduction payments to insurers, which help them offer lower deductibles to low-income people, through 2019; it also provides substantial funding for Obamacare enrollment outreach.
In exchange, Republicans would receive more freedom for states to shape their own health care systems. States would have to jump through fewer hoops for waivers from Obamacare, and approvals would be streamlined. The bill would also expand eligibility for catastrophic coverage under the ACA, a goal for Republicans who want to increase the options consumers have on the marketplace.
This bipartisan agreement would provide a lifeline to individuals and to states and absent other solutions is definitely on the docket for consideration in the final weeks of this session of Congress.
Congress passed a supplemental appropriations bill in September that provided some breathing room as the federal government was once again hitting its Congressionally authorized debt ceiling. The ceiling, or limit, specifies the maximum amount of money the U.S. can borrow. Because the U.S. spends more than it takes in, an inability to borrow would lead to a debt default, jolting financial markets worldwide. According to the U.S. Treasury, Congress will need to take action to raise the debt limit by sometime in January 2018 or potentially face default. Earlier in the year, President Trump suggested permanently removing the debt ceiling – something that would be highly unorthodox for a Republican president and Congress to do.
While Congress squabbles over significant changes to tax law, they have buried in the bills proposals to extend or make permanent several provisions that have been continually renewed over the years. But several noteworthy provisions that expired at the end of 2016, such as the deduction for mortgage insurance premiums and the exclusion for forgiven debt on principal homes, that didn’t make it in. In an effort to address those issues included as well as the “orphans,” Congressional staff and even a few Members have already begun discussing another tax bill that might come later this year. Expect such a bill to be ready to go if and when a larger tax effort falls flat
House Republicans overcame bipartisan opposition to pass a bill that would reauthorize and overhaul the National Flood Insurance Program. The program, which has strained to pay out billions of dollars to policyholders for years – and after this year’s run of devastating hurricanes is taking on more and more water (pun intended) – expires on December 8th. However serious concerns raised by Democrats, coastal Republicans, and several prominent business groups have threatened to derail the legislative effort.
The House vote marked Congress’ first attempt this year to pass a long-term renewal of the flood insurance program before it expires on Dec. 8. The Senate, where negotiations are ongoing, was not expected to take up the House package but instead offer their own. If Congress allows the program to expire, coastal housing markets would freeze and millions of homeowners in federally recognized flood zones would be at risk of not being insured. If no long-term solution is offered, expect Congress to pass a year long extension or some bridge to allow Congress to continue to debate the program.
Politico “The national conversation about sexual harassment has hit the clubby halls of the Capitol with a vengeance. Democrats faced their own internal reckoning on Thursday when Sen. Al Franken (D-MN) apologized to a radio anchor who said he forcibly kissed and groped her in 2006. Once a potential presidential hopeful, Franken quickly submitted to an ethics committee investigation.
The Franken bombshell came amid a deluge of news coverage in recent days of Alabama Senate candidate Roy Moore, who is accused of harassing or sexually assaulting [a growing] list of women. Earlier Thursday, the chief of staff to a House lawmaker leading the charge against sexual harassment in Congress resigned in the face of sexual misconduct allegations by former aides. And earlier this week, a pair of female lawmakers said there are several current members of Congress who have sexually harassed women.
The Hill “The Alabama Republican Party is shrugging off pressure from Senate Majority Leader Mitch McConnell (R-Ky.) to disqualify Roy Moore as its nominee for Senate. Members of the state party’s executive committee [has] made no move to strip Moore of the nomination. … A national Republican Senatorial Committee (NRSC) poll conducted Sunday and Monday found Moore trailing Democrat Doug Jones by 12 points.
Elephants, Lions, Just Why?
ELEPHANTS The Hill “The Trump administration Friday formalized its new policy to allow hunters to bring in parts of African elephants that they killed in Zimbabwe. A Federal Register notice made final the highly controversial policy that the Fish and Wildlife Service (FWS) announced Wednesday regarding African elephant trophies, usually the heads of the animals. It is a stark reversal of the Obama administration’s 2014 ruling that elephant trophies from the southern African nation cannot be imported.The FWS [is making] a determination that the killing of trophy animals in Zimbabwe, on or after January 21, 2016, and on or before December 31, 2018, will enhance the survival of the African elephant,” the agency wrote. … African elephants are considered both by FWS and by international conservation officials to be threatened species.”
LIONS “President Trump’s administration began allowing the import of lion trophies from two African countries last month. ABC News reports that that the U.S. Fish and Wildlife Service (FWS) began issuing permits for the importing of lion trophies — lion body parts taken after hunting — from Zambia and Zimbabwe a month ago. … The Obama administration added the African lion to the endanger species list in 2015 after a Minnesota dentist killed a beloved lion named Cecil in Zimbabwe. According to the African Wildlife Foundation, the population of the African lion has decreased by 43% over the past two decades and is regionally extinct in seven African countries. … The FWS said it has determined that hunting African elephants in the two African countries “will enhance the survival of the species in the wild,” which is the standard by which officials judge whether to allow imports of the body parts.”
“Negative-emissions technology … Stopping the flow of carbon dioxide into the atmosphere is not enough. It has to be sucked out, too” — The Economist’s cover leader (editorial):
- The problem: “The Paris agreement assumes, in effect, that the world will find ways to suck CO2 out of the air. That is because, in any realistic scenario, emissions cannot be cut fast enough to keep the total stock of greenhouse gases sufficiently small to limit the rise in temperature successfully. But there is barely any public discussion of how to bring about the extra ‘negative emissions.'”
- Solutions: “One option is to plant more forests (which act as a carbon sink) or to replace the deep-ploughing of fields with shallow tillage (which helps soils absorb and retain more CO2). Another is to apply carbon capture and storage to biomass-burning power plants, stashing the carbon sucked up by crops or trees burnt as fuel.”
- Why it matters: “When the need is great, the science is nascent and commercial incentives are missing, the task falls to government and private foundations. But they are falling short.”
For Your Radar
AP “TransCanada Corp.’s Keystone pipeline leaked an estimated 210,000 gallons of oil onto agricultural land in northeastern South Dakota, the company and state regulators said Thursday, but state officials don’t believe the leak polluted any surface water bodies or drinking water systems. … Discovery of the leak comes just days before Nebraska regulators are scheduled to announce their decision Monday whether to approve the proposed Keystone XL oil pipeline.”
FCC Relaxes Media Ownership Rules
Variety “Broadcasters will be allowed to combine with a newspaper in the same market, and could be allowed to own two of the top four stations in a city, as the FCC on Thursday relaxed a series of long-standing media ownership regulations. The new rules, passed in a 3-2 vote, may be challenged in court, but if they survive, they will mark the most significant changes to media ownership regulations in a generation. They could lead to further consolidation and mergers among broadcasters, who have long argued that they need greater scale to compete with cable and internet companies for local ad dollars.”
Why This Is Important … “The changes are taking place just as the FCC is considering whether to allow Sinclair Broadcast Group — a conservative, Trump-friendly television empire — to merge with Tribune Media, creating a station group powerhouse with control over 233 stations and a reach of 72% of the country. Democrats are tying the FCC’s moves to relax ownership rules to Sinclair, arguing that the FCC is giving preferential treatment to one company that has been favorable to the Trump administration.”
CNN “Tesla unveiled its new electric semi-truck, which CEO Elon Musk said can go zero-to-60 in … 20 seconds, according to Musk, much faster than any diesel-powered truck. … It can go up to 500 miles with a full load at highway speeds, … allowing [the average] driver to make a round trip before recharging.
Inside the Tesla semi’s cab, the driver is seated in the center … with a large touch screen on each side. Without a large diesel engine, the driver will have a roomier cab than in other trucks …The truck will also have an enhanced version of Tesla’s semi-autonomous driving system, AutoPilot.”It is not clear yet what the final price of the truck will be.”
AP: “Musk said customers can put down a $5,000 deposit … now and production will begin in 2019.”