Category: Featured

April 18, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative and Regulatory Watch List:

  • 2018 Farm Bill:  House Agriculture Committee will markup Chairman Conaway's Farm Bill on April 18:
  • FY 2019 Budget Resolution:  Contrary to previous comments, House Budget Chairman Steve Womack said his committee will write a 2019 Budget Resolution.
    • Womack indicated the Resolution will focus on entitlement cuts -- which is likely a non-starter in the Senate where Majority Leader McConnell has downplayed the need for a filibuster-proof Budget Reconciliation bill this year.  The Budget Resolution requires House-Senate concurrence.
  • Joint Select Committee on Budget and Appropriations Process Reform holds first hearing:
    • Notable comment from co-chair Nita Lowey (D-NY):  “The root cause of our current situation has much more to do with deep policy disagreements, often over issues that shouldn’t be part of appropriations bills and a lack of political will,” Lowey said. “Procedural reforms alone are insufficient, but perhaps an improved process could facilitate reaching and implementing agreements when there is the will to do so.”
    • Process reforms discussed at the hearing included changes to the debt ceiling, moving the fiscal year to a calendar year, prohibiting filibuster-proof Budget Reconciliation measures from raising deficits, biennial budgeting, and a Joint Budget Resolution requiring the President's signature.  Click here for further details of the hearing.
  • Medicaid work requirements: 
  • Health care rule changes - impact on consumers: 
  • FY'18 Rescission Bill Unlikely:  White House officials and House GOP leaders have discussed "rescinding" some of the non-defense discretionary funding in the just-passed omnibus spending bill for FY'18, but such a measure would be unlikely to pass the Senate.  Rescission bills are filibuster-proof, but bringing a rescission bill to the Senate Floor would be certain to scuttle negotiations on FY 2019 appropriations, where bipartisan support is required. Background on rescission bills.
  • DACA remains an urgent issue, with 700,000 young people protected from deportation only by Federal District Court injunctions temporarily halting the Trump Administration's termination of the program. The political impasse over a legislative solution continues.  Background on DACA.
  • Financial Regulation - House and Senate remain on separate tracks:
    • The financial regulation bill passed by the Senate with bipartisan support raises the SIFI threshold (regulation of systemically important financial institutions) and provides some regulatory relief for small community banks and credit unions, but leaves most of Dodd-Frank (including the CFPB) intact.
    • The House legislation would repeal Dodd-Frank -- an approach that has no chance of passing the Senate.
    • Background
  • Major action on infrastructure has dropped off the 2018 agenda. 
    • The White House planclaiming that $200 billion in federal funds would leverage $1.5 trillion in spending by assuming State, local, and private sector investments that would not otherwise occur, gained little traction on Capitol Hill and the Administration's point person on infrastructure left the White House in early April.
    • Senate Democrats’ "Jobs & Infrastructure Plan" to invest $1 trillion of federal resources in infrastructure -- paid for by rolling back parts of the 2017 tax cuts -- has no support among Republicans.
    • More on Infrastructure...

Omnibus Appropriations Act:

...

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April 17, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative and Regulatory Watch List:

  • Fed Vice Chair Nominee:  Richard Clarida, a Columbia University Republican economist and monetary policy specialist, will be nominated to serve as vice chairman to Fed Chairman Jerome Powell.
  • FY 2019 Budget Resolution:  Contrary to previous comments, House Budget Chairman Steve Womack said his committee will write a 2019 Budget Resolution.
    • He indicated the Resolution will focus on entitlement cuts -- which is likely a non-starter in the Senate.  The Budget Resolution requires House-Senate concurrence.
  • 2018 Farm Bill:  Chairman Conaway introduce the Agriculture and Nutrition Act on April 12, 2018.
  • Medicaid work requirements: 
  • Health care rule changes - impact on consumers: 
  • FY'18 Rescission Bill Unlikely:  White House officials and House GOP leaders have discussed "rescinding" some of the non-defense discretionary funding in the just-passed omnibus spending bill for FY'18, but such a measure would be unlikely to pass the Senate.  Rescission bills are filibuster-proof, but bringing a rescission bill to the Senate Floor would be certain to scuttle negotiations on FY 2019 appropriations, where bipartisan support is required. Background on rescission bills.
  • DACA remains an urgent issue, with 700,000 young people protected from deportation only by Federal District Court injunctions temporarily halting the Trump Administration's termination of the program. The political impasse over a legislative solution continues.  Background on DACA.
  • Financial Regulation:  The House and Senate remain on separate tracks.
    • The fin-reg bill passed by the Senate with bipartisan support raises the SIFI threshold (regulation of systemically important financial institutions) and provides some regulatory relief for small community banks and credit unions, but leaves most of Dodd-Frank (including the CFPB) intact.
    • The House legislation would repeal Dodd-Frank -- an approach that has no chance of passing the Senate.
    • Background
  • BBA Rejected:  H.J.Res. 2, the Balanced Budget Constitutional Amendment, failed to get the required 2/3 vote on Thursday, 233-184.
  • Major action on infrastructure has dropped off the 2018 agenda. 
    • The White House planclaiming that $200 billion in federal funds would leverage $1.5 trillion in spending by assuming State, local, and private sector investments that would not otherwise occur, gained little traction on Capitol Hill and the Administration's point person on infrastructure left the White House in early April.
    • Senate Democrats’ "Jobs & Infrastructure Plan" to invest $1 trillion of federal resources in infrastructure -- paid for by rolling back parts of the 2017 tax cuts -- has no support among Republicans.
    • More on Infrastructure...

Omnibus Appropriations Act:

CBO Report Projects Trillion-Dollar Deficits, Debt Rising to 100% of GDP, Interest Payments Nearing $1 Trillion per Year

  • On Monday, the Congressional Budget Office (CBO) released its annual budget and economic projections, portending danger to the U.S. economy from unsustainable deficits.
  • Trillion Dollar Deficits:  Annual deficits, under current spending and revenue policies, are projected to exceed $1 trillion per year beginning in 2020, reaching $1.5 trillion in 2028 -- and that's assuming no recessions.
  • Public Debt Rising to 100% of GDP:  Debt-Held-by-the-Public is projected to exceed $28 trillion within a decade, nearing 100% of GDP.
    • Explanation:  "Debt-held-by-the-public," currently $15 trillion, is lower than "gross debt," currently $21 trillion, which includes debt held by government trust funds, e.g. the Social Security Trust Funds.  Debt-held-by-the-public is typically viewed as more economically significant, although gross debt is significant, as well, because it more thoroughly reflects liabilities of the Federal government.
  • Interest Payments Nearing $1 Trillion:  Net Interest Payments on the Public Debt are projected to reach $915 billion per year within a decade, approaching one-fifth of tax revenues.
  • Realistic Projections are Even Worse: CBO's "baseline" projections assume Congress will allow individual tax cuts to expire in 2025 (as currently scheduled) and will allow defense and non-defense spending levels to drop significantly in 2020--both of which are unrealistic.  If one assumes that current spending levels and tax cuts are continued, debt would rise to 105% of GDP.   
  • Why This is Dangerous:  A path to trillion-dollar annual interest payments:
    • diverts public resources away from productive investments, e.g., infrastructure, R&D, and education;
    • reduces credit available for private sector investment;
    • pushes up interest rates and inflation;
    • limits the nation's ability to respond to critical needs and disasters; and
    • increases the likelihood of a fiscal crisis, where "investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply," says CBO.
  • Key Drivers of Exploding Deficits:
    1. Aging of the population and the rising health care costs will cause Social Security, Medicare, and Medicaid outlays to double over the next decade adding to deficits and threatening the solvency of the Social Security and Hospital Insurance Trust Funds.
    2. Interest payments on the public debt are escalating rapidly (tripling over the next 10 years) due to the accumulating public debt and expected interest rate increases.
    3. The 2017 tax cuts will increase deficits by $1.85 trillion -- even after netting out projected revenues from economic growth -- on the heels of major tax cuts in 2013 and 2010.
    4. The Great Recession boosted the public debt due to necessary spending increases (the stimulus bill, unemployment insurance, food stamps, and other emergency benefits) and revenue losses from reduced economic activity and tax stimulus measures.
    5. The three Bipartisan Budget Acts (in 2013, 2015, and 2018) rolled back the steep 2013 automatic cuts ("sequestration") in defense and non-defense discretionary spending.  While this has added to deficits, discretionary spending in the context of overall GDP has not been a principal driver of escalating debt. (see CBO table, p. 85)
  • How to Avoid a Fiscal and Economic Crisis: A serious, bipartisan effort that addresses all areas of the budget -- spending and tax revenues.  This has not occurred since 2010 when two bipartisan commissions  -- Domenici-Rivlin and Simpson-Bowles -- proposed major reforms.

...

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April 16, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative and Regulatory Watch List:

  • FY 2019 Budget Resolution:  Contrary to previous comments, House Budget Chairman Steve Womack said his committee will write a 2019 Budget Resolution.
    • He indicated the Resolution will focus on entitlement cuts -- which is likely a non-starter in the Senate.  The Budget Resolution requires House-Senate concurrence.
  • 2018 Farm Bill:  Chairman Conaway introduce the Agriculture and Nutrition Act on April 12, 2018.
  • Medicaid work requirements: 
  • Health care rule changes - impact on consumers: 
  • FY'18 Rescission Bill Unlikely:  White House officials and House GOP leaders have discussed "rescinding" some of the non-defense discretionary funding in the just-passed omnibus spending bill for FY'18, but such a measure would be unlikely to pass the Senate.  Rescission bills are filibuster-proof, but bringing a rescission bill to the Senate Floor would be certain to scuttle negotiations on FY 2019 appropriations, where bipartisan support is required. Background on rescission bills.
  • DACA remains an urgent issue, with 700,000 young people protected from deportation only by Federal District Court injunctions temporarily halting the Trump Administration's termination of the program. The political impasse over a legislative solution continues.  Background on DACA.
  • Financial Regulation:  The House and Senate remain on separate tracks.
    • The fin-reg bill passed by the Senate with bipartisan support raises the SIFI threshold (regulation of systemically important financial institutions) and provides some regulatory relief for small community banks and credit unions, but leaves most of Dodd-Frank (including the CFPB) intact.
    • The House legislation would repeal Dodd-Frank -- an approach that has no chance of passing the Senate.
    • Background
  • BBA Rejected:  H.J.Res. 2, the Balanced Budget Constitutional Amendment, failed to get the required 2/3 vote on Thursday, 233-184.
  • Major action on infrastructure has dropped off the 2018 agenda. 
    • The White House planclaiming that $200 billion in federal funds would leverage $1.5 trillion in spending by assuming State, local, and private sector investments that would not otherwise occur, gained little traction on Capitol Hill and the Administration's point person on infrastructure left the White House in early April.
    • Senate Democrats’ "Jobs & Infrastructure Plan" to invest $1 trillion of federal resources in infrastructure -- paid for by rolling back parts of the 2017 tax cuts -- has no support among Republicans.
    • More on Infrastructure...

Omnibus Appropriations Act:

CBO Report Projects Trillion-Dollar Deficits, Debt Rising to 100% of GDP, Interest Payments Nearing $1 Trillion per Year

  • On Monday, the Congressional Budget Office (CBO) released its annual budget and economic projections, portending danger to the U.S. economy from unsustainable deficits.
  • Trillion Dollar Deficits:  Annual deficits, under current spending and revenue policies, are projected to exceed $1 trillion per year beginning in 2020, reaching $1.5 trillion in 2028 -- and that's assuming no recessions.
  • Public Debt Rising to 100% of GDP:  Debt-Held-by-the-Public is projected to exceed $28 trillion within a decade, nearing 100% of GDP.
    • Explanation:  "Debt-held-by-the-public," currently $15 trillion, is lower than "gross debt," currently $21 trillion, which includes debt held by government trust funds, e.g. the Social Security Trust Funds.  Debt-held-by-the-public is typically viewed as more economically significant, although gross debt is significant, as well, because it more thoroughly reflects liabilities of the Federal government.
  • Interest Payments Nearing $1 Trillion:  Net Interest Payments on the Public Debt are projected to reach $915 billion per year within a decade, approaching one-fifth of tax revenues.
  • Realistic Projections are Even Worse: CBO's "baseline" projections assume Congress will allow individual tax cuts to expire in 2025 (as currently scheduled) and will allow defense and non-defense spending levels to drop significantly in 2020--both of which are unrealistic.  If one assumes that current spending levels and tax cuts are continued, debt would rise to 105% of GDP.   
  • Why This is Dangerous:  A path to trillion-dollar annual interest payments:
    • diverts public resources away from productive investments, e.g., infrastructure, R&D, and education;
    • reduces credit available for private sector investment;
    • pushes up interest rates and inflation;
    • limits the nation's ability to respond to critical needs and disasters; and
    • increases the likelihood of a fiscal crisis, where "investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply," says CBO.
  • Key Drivers of Exploding Deficits:
    1. Aging of the population and the rising health care costs will cause Social Security, Medicare, and Medicaid outlays to double over the next decade adding to deficits and threatening the solvency of the Social Security and Hospital Insurance Trust Funds.
    2. Interest payments on the public debt are escalating rapidly (tripling over the next 10 years) due to the accumulating public debt and expected interest rate increases.
    3. The 2017 tax cuts will increase deficits by $1.85 trillion -- even after netting out projected revenues from economic growth -- on the heels of major tax cuts in 2013 and 2010.
    4. The Great Recession boosted the public debt due to necessary spending increases (the stimulus bill, unemployment insurance, food stamps, and other emergency benefits) and revenue losses from reduced economic activity and tax stimulus measures.
    5. The three Bipartisan Budget Acts (in 2013, 2015, and 2018) rolled back the steep 2013 automatic cuts ("sequestration") in defense and non-defense discretionary spending.  While this has added to deficits, discretionary spending in the context of overall GDP has not been a principal driver of escalating debt. (see CBO table, p. 85)
  • How to Avoid a Fiscal and Economic Crisis: A serious, bipartisan effort that addresses all areas of the budget -- spending and tax revenues.  This has not occurred since 2010 when two bipartisan commissions  -- Domenici-Rivlin and Simpson-Bowles -- proposed major reforms.

...

read more

April 14, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative Watch List:

  • FY'18 Rescission Bill Unlikely:  White House officials and House GOP leaders have discussed "rescinding" some of the non-defense discretionary funding in the just-passed omnibus spending bill for FY'18, but such a measure would be unlikely to pass the Senate.  Rescission bills are filibuster-proof, but bringing a rescission bill to the Senate Floor would be certain to scuttle negotiations on FY 2019 appropriations, where bipartisan support is required. Background on rescission bills.
  • DACA remains an urgent issue, with 700,000 young people protected from deportation only by Federal District Court injunctions temporarily halting the Trump Administration's termination of the program. The political impasse over a legislative solution continues.  Background on DACA.
  • Financial Regulation:  The House and Senate remain on separate tracks.
    • The fin-reg bill passed by the Senate with bipartisan support raises the SIFI threshold (regulation of systemically important financial institutions) and provides some regulatory relief for small community banks and credit unions, but leaves most of Dodd-Frank (including the CFPB) intact.
    • The House legislation would repeal Dodd-Frank -- an approach that has no chance of passing the Senate.
  • BBA Rejected:  H.J.Res. 2, the Balanced Budget Constitutional Amendment, failed to get the required 2/3 vote on Thursday, 233-184.
  • Major action on infrastructure has dropped off the 2018 agenda. 
    • The White House planclaiming that $200 billion in federal funds would leverage $1.5 trillion in spending by assuming State, local, and private sector investments that would not otherwise occur, gained little traction on Capitol Hill and the Administration's point person on infrastructure left the White House in early April.
    • Senate Democrats’ "Jobs & Infrastructure Plan" to invest $1 trillion of federal resources in infrastructure -- paid for by rolling back parts of the 2017 tax cuts -- has no support among Republicans.
    • More on Infrastructure...

Omnibus Appropriations Act:

CBO Report Projects Trillion-Dollar Deficits, Debt Rising to 100% of GDP, Interest Payments Nearing $1 Trillion per Year

  • On Monday, the Congressional Budget Office (CBO) released its annual budget and economic projections, portending danger to the U.S. economy from unsustainable deficits.
  • Trillion Dollar Deficits:  Annual deficits, under current spending and revenue policies, are projected to exceed $1 trillion per year beginning in 2020, reaching $1.5 trillion in 2028 -- and that's assuming no recessions.
  • Public Debt Rising to 100% of GDP:  Debt-Held-by-the-Public is projected to exceed $28 trillion within a decade, nearing 100% of GDP.
    • Explanation:  "Debt-held-by-the-public," currently $15 trillion, is lower than "gross debt," currently $21 trillion, which includes debt held by government trust funds, e.g. the Social Security Trust Funds.  Debt-held-by-the-public is typically viewed as more economically significant, although gross debt is significant, as well, because it more thoroughly reflects liabilities of the Federal government.
  • Interest Payments Nearing $1 Trillion:  Net Interest Payments on the Public Debt are projected to reach $915 billion per year within a decade, approaching one-fifth of tax revenues.
  • Realistic Projections are Even Worse: CBO's "baseline" projections assume Congress will allow individual tax cuts to expire in 2025 (as currently scheduled) and will allow defense and non-defense spending levels to drop significantly in 2020--both of which are unrealistic.  If one assumes that current spending levels and tax cuts are continued, debt would rise to 105% of GDP.   
  • Why This is Dangerous:  A path to trillion-dollar annual interest payments:
    • diverts public resources away from productive investments, e.g., infrastructure, R&D, and education;
    • reduces credit available for private sector investment;
    • pushes up interest rates and inflation;
    • limits the nation's ability to respond to critical needs and disasters; and
    • increases the likelihood of a fiscal crisis, where "investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply," says CBO.
  • Key Drivers of Exploding Deficits:
    1. Aging of the population and the rising health care costs will cause Social Security, Medicare, and Medicaid outlays to double over the next decade adding to deficits and threatening the solvency of the Social Security and Hospital Insurance Trust Funds.
    2. Interest payments on the public debt are escalating rapidly (tripling over the next 10 years) due to the accumulating public debt and expected interest rate increases.
    3. The 2017 tax cuts will increase deficits by $1.85 trillion -- even after netting out projected revenues from economic growth -- on the heels of major tax cuts in 2013 and 2010.
    4. The Great Recession boosted the public debt due to necessary spending increases (the stimulus bill, unemployment insurance, food stamps, and other emergency benefits) and revenue losses from reduced economic activity and tax stimulus measures.
    5. The three Bipartisan Budget Acts (in 2013, 2015, and 2018) rolled back the steep 2013 automatic cuts ("sequestration") in defense and non-defense discretionary spending.  While this has added to deficits, discretionary spending in the context of overall GDP has not been a principal driver of escalating debt. (see CBO table, p. 85)
  • How to Avoid a Fiscal and Economic Crisis: A serious, bipartisan effort that addresses all areas of the budget -- spending and tax revenues.  This has not occurred since 2010 when two bipartisan commissions  -- Domenici-Rivlin and Simpson-Bowles -- proposed major reforms.

...

read more

April 12, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative Watch List:

Omnibus Appropriations Act:

CBO Report Projects Trillion-Dollar Deficits, Debt Rising to 100% of GDP, Interest Payments Nearing $1 Trillion per Year

  • On Monday, the Congressional Budget Office (CBO) released its annual budget and economic projections, portending serious danger to the U.S. economy from unsustainable deficits.
  • Trillion Dollar Deficits:  Annual deficits, under current spending and revenue policies, are projected to exceed $1 trillion per year beginning in 2020, reaching $1.5 trillion in 2028 -- and that's assuming no recessions.
  • Public Debt Rising to Nearly 100% of GDP:  Debt-Held-by-the-Public is projected to exceed $28 trillion within a decade, nearing 100% of GDP.
    • Explanation:  "Debt-held-by-the-public," currently $15 trillion, is lower than "gross debt," currently $21 trillion, which includes debt held by government trust funds, e.g. the Social Security Trust Funds.  Debt-held-by-the-public is typically viewed as more economically significant, although gross debt is significant, as well, because it more thoroughly reflects liabilities of the Federal government .
  • Interest Payments Nearing $1 Trillion:  Net Interest Payments on the Public Debt are projected to reach $915 billion per year within a decade, approaching one-fifth of tax revenues.
  • Realistic Projections are Even Worse: CBO's "baseline" projections assume Congress will allow individual tax cuts to expire in 2025 (as currently scheduled) and will allow defense and non-defense spending levels to drop significantly in 2020--both of which are unrealistic.  If one assumes that current spending levels and tax cuts are continued, debt would rise to 105% of GDP.   
  • Why This is Dangerous:  A path to trillion-dollar annual interest payments:
    • diverts public resources away from productive investments, e.g., infrastructure, R&D, and education;
    • reduces credit available for private sector investment;
    • pushes up interest rates and inflation;
    • limits the nation's ability to respond to critical needs and disasters; and
    • increases the likelihood of a fiscal crisis, where "investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply," says CBO.
  • Causes of Exploding Deficits:
    1. 2017 tax cuts will increase deficits by $1.8 trillion -- even after assuming potential economic growth.
    2. Large increases in defense spending -- 15% in 2018 and 15% in 2019 (and likely to continue thereafter).
    3. Aging of the population and the rising costs of health care will cause Social Security, Medicare, and Medicaid outlays to double over the next decade.
    4. Rising annual interest payments (tripling over the next 10 years) due to escalating deficits and rising interest rates.
  • How to Avoid a Fiscal Crisis and Economic Crisis: The only way to avoid a crisis is a serious, bipartisan effort that addresses all areas of the budget -- spending and tax revenues.  This has not occurred since 2010 when two bipartisan commissions  -- Domenici-Rivlin and Simpson-Bowles -- proposed major reforms.  See CBO's most recent compendium of spending and revenue options for reducing the deficit.

...

read more

April 10, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative Watch List:

Omnibus Appropriations Act:

CBO Report Projects Trillion-Dollar Deficits, Debt Rising to 100% of GDP, Interest Payments Nearing $1 Trillion per Year

  • On Monday, the Congressional Budget Office (CBO) released its annual budget and economic projections, portending serious danger to the U.S. economy from unsustainable deficits.
  • Trillion Dollar Deficits:  Annual deficits, under current spending and revenue policies, are projected to exceed $1 trillion per year beginning in 2020, reaching $1.5 trillion in 2028 -- and that's assuming no recessions.
  • Public Debt Rising to Nearly 100% of GDP:  Debt-Held-by-the-Public is projected to exceed $28 trillion within a decade, nearing 100% of GDP.
    • Explanation:  "Debt-held-by-the-public," currently $15 trillion, is lower than "gross debt," currently $21 trillion, which includes debt held by government trust funds, e.g. the Social Security Trust Funds.  Debt-held-by-the-public is typically viewed as more economically significant, although gross debt is significant, as well, because it more thoroughly reflects liabilities of the Federal government .
  • Interest Payments Nearing $1 Trillion:  Net Interest Payments on the Public Debt are projected to reach $915 billion per year within a decade, approaching one-fifth of tax revenues.
  • Realistic Projections are Even Worse: CBO's "baseline" projections assume Congress will allow individual tax cuts to expire in 2025 (as currently scheduled) and will allow defense and non-defense spending levels to drop significantly in 2020--both of which are unrealistic.  If one assumes that current spending levels and tax cuts are continued, debt would rise to 105% of GDP.   
  • Why This is Dangerous:  A path to trillion-dollar annual interest payments:
    • diverts public resources away from productive investments, e.g., infrastructure, R&D, and education;
    • reduces credit available for private sector investment;
    • pushes up interest rates and inflation;
    • limits the nation's ability to respond to critical needs and disasters; and
    • increases the likelihood of a fiscal crisis, where "investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply," says CBO.
  • Causes of Exploding Deficits:
    1. 2017 tax cuts increase deficits by $1.7 trillion -- even after assuming potential economic growth.
    2. Large increases in defense spending -- 15% in 2018 and 15% in 2019 (and likely to continue thereafter).
    3. Aging of the population and the rising costs of health care cause Social Security, Medicare, and Medicaid outlays to double over the next decade.
    4. Rising annual interest payments (tripling over the next 10 years).
    5. Costs of restoring non-defense discretionary spending to pre-sequester levels.
  • How to Avoid a Fiscal Crisis and Economic Crisis: The only way to avoid a crisis is a serious, bipartisan effort that addresses all areas of the budget -- spending and tax revenues.  This has not occurred since 2010 when two bipartisan commissions  -- Domenici-Rivlin and Simpson-Bowles -- proposed major reforms.  See CBO's most recent compendium of spending and revenue options for reducing the deficit.

...

read more

April 9, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative Watch List:

Omnibus Appropriations Act:

...

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March 23, 2018 / by Charles S. Konigsberg Updated 7:00pm EDT
TipSheet will resume after Congress' Easter-Passover recess

Links:

Hot Docs:

Congress Passes, President Signs $1.3 Trillion Spending Bill Averting Government Shutdown

Highlights of the $1.3 trillion omnibus spending bill:

  • The $1.3 trillion FY 2018 Omnibus Appropriations Act provides:
    • $629 billion in base defense funding and $66 billion for the "off-budget" Overseas Contingency Operations (OCO) for a total of nearly $700 billion; and
    • $579 billion in base nondefense funding and $12 billion for "off-budget" OCO for a total of nearly $600 billion.
  • These levels reflect the 2018 Bipartisan Budget Act that raised the FY'18 budget caps on discretionary spending:
    • for defense by $80 billion (15%); and
    • non-defense by $63 billion (12%).
  • Defense:  The bill provides the biggest year-over-year increase in defense funding in 15 years.  Combined with FY2018 funding previously approved by Congress for missile defense and disaster response, the Defense Department will receive more than $61 billion over the 2017 enacted level.
    • Funds a 2.4 percent pay increase for troops.
    • $133.4 billion for Military Personnel, which is $4.6 billion more than the FY2017 enacted level.
    • Increases end strength by 8500 active and 1000 Guard/Reserve.
    • $190.5 billion for Operations and Maintenance, which is $22.9 billion more than the FY2017 enacted level.
    • $133.9 billion for Procurement, which is $ 25.4 billion more than the FY2017 enacted level.
    • $88.3 billion for Research and Development, which is $16 billion more than the FY2017 enacted level.
    • $4.8 billion for the European Reassurance Initiative, which is equal to the request.
    • $34.4 billion for Defense Health requirements – $764 million above the budget request, including $1.1 billion for congressionally directed medical research programs.
    • $705.8 million for the Israeli Missile Defense Cooperative program, which is $105 million more than the 2017 enacted level.
    • $35 million for continued implementation and expansion of the Sexual Assault Special Victim’s Counsel Program.
    • $200 million in OCO for Ukraine, which is $50 million more than the 2017 enacted level.
    • Prohibits the use of funds in Syria and Iraq in contravention of the War Powers Resolution.
    • Does not include the Lee amendment requiring new Authorization for Use of Military Force, which passed the House Appropriations Committee.
    • Prohibits funding to transfer or release Guantanamo Bay detainees to the U.S.
  • Overall Non-defense discretionary funding:
    • The bill includes $600 billion in non-defense spending, including $12 billion in OCO.
    • President Trump’s FY2018 budget request proposed cutting $54 billion from the existing statutory cap;
    • the House Appropriations bills proposed cutting $5 billion;
    • enactment of the Bipartisan Budget Act of 2018 increased NDD by $63 billion. 
  • Early Childhood:  $610 million increase for Head Start and a $2.37 billion increase for the Child Care and Development Block Grant (CCDBG) program (for a total of $5.22 billion), putting CCDBG at its highest discretionary funding level.
  • Education:  $700 million increase for Student Support and Academic Enrichment Grants, a $300 million increase for Title I Grants to Schools and a $275 million increase for Special Education Part B State Grants (IDEA). It also provides funding to raise the maximum Pell Grant award by $175 and creates a $350 million discretionary relief fund for borrowers to receive public service loan forgiveness.
  • Opioids:  $3 billion increase for programs to respond to the opioid crisis, including a $2.7 billion increase for prevention, treatment, surveillance, research to develop non-opioid pain medication, behavioral workforce training, and support for children and families. Also includes $114 million for FDA activities and a $300 million increase for the Department of Justice for activities such as heroin enforcement task forces, drug courts, prescription drug monitoring, treatment, and overdose reversal medication.
  • Research: $3 billion increase for National Institutes of Health (NIH) medical research. It provides a $231 billion increase for Energy Efficiency and Renewable Energy, $868 million increase for the Department of Energy Office of Science, and a $47 million increase for Advanced Research Projects Agency Energy (ARPA-E). The Omnibus also includes a $295 million increase for the National Science Foundation, a $234 million increase for NOAA, and a $1.08 billion increase for NASA.
  • Election Integrity:  $380 million in new money for the Election Assistance Commission (EAC) to distribute to states as grants to protect election systems from cyber threats.
  • Census:  $1.3 billion increase for the Census Bureau, which is critical to ensure an accurate count leading into the decennial Census and subsequent reapportionment.
  • Public Safety and Law Enforcement: 3 to 5 percent boosts for law enforcement agencies including the U.S. Marshals Service, FBI and Drug Enforcement Administration;  $375 million increase for State and Local Law Enforcement Activities, including a $54 million increase for the COPS office; a $40 million increase for the State Homeland Security Grant Program, a $25 million increase for the Urban Area Security Initiative, a $149 million increase for Pre-Disaster Mitigation grants, and an $85 million increase for Flood Mapping.
  • CDC:  $806 million increase for the Centers for Disease Control and Prevention (CDC).
  • Local Infrastructure: $21 billion to rebuild and improve infrastructure, including: $2.525 billion in new funding for highway formula grants; $1 billion increase for the National Infrastructure Investment (TIGER) grants program which fund innovative road, transit, maritime and road projects; $232 million increase for subway, light rail, and commuter rail transit systems; $446.6 million increase for Amtrak; $305 million increase for Community Development Block Grants (CDBG); $789 million increase for Army Corps of Engineers water resources projects, including funding for new starts; $1.8 billion increase for rural water and wastewater treatment; and a $600 million increase for rural broadband.
  • Environment: $763 million increase for the Environmental Protection Agency, avoiding steep cuts initially proposed by Trump. This includes increases of $300 million each for Clean Water and Safe Drinking Water Funds; $63 million for Water Infrastructure Finance and Innovation Act grants; and $50 million for three new grants programs to address lead in drinking water, including $20 million for a Voluntary School Lead Testing grant program. It also includes a $270 million increase for the National Park Service and $25 million increase for the Land and Water Conservation Fund (LWCF), and reauthorizes the EPA Brownfields program.
  • Housing: $808 million increase for the Public Housing Capital Fund, which will cut down the backlog of unmet renovation needs. It also includes a $250 million increase for HOME Investment Partnerships, $176 million increase for Housing for the Elderly, $85 million increase for Housing for the Disabled, and $90 million increase for Lead Hazard Control and Healthy Homes; and expands the Low-Income Housing Tax Credit which will increase 12.5% for the next four years.
  • Veterans: The Omnibus provides a $7 billion increase for the Department of Veterans Affairs, with significant increases for medical services, mental health services, medical and prosthetic research, and opioid abuse services. This amount also includes $2 billion for infrastructure improvements at VA facilities and state veterans’ homes.
  • Border Fence:  President Trump gets a nearly $1.6 billion down payment on a border "fence" providing only 33 miles of new barriers, but did not get money for additional ICE agents and detention beds and did not get provisions to cut off funding to sanctuary cities.
  • NY-NJ Gateway:  Trump successfully cut the $900 million set-aside for the "Gateway project" -- new commuter rail and transit lines between New York and New Jersey under the Hudson River -- although Gateway projects (the Portal North Bridge replacement project and Hudson River Tunnel project) apparently would still qualify for transportation grant funds.
  • Gun Background Checks - Fix NICS:  Includes the so-called "FIX NICS" bill (S 2135) that would require federal agencies and incentivize states to enter data into the National Instant Criminal Background Check System.
  • Fixes the "grain glitch" -- a provision in last year's tax law that would allow farmers bigger deductions for sales to agricultural cooperatives than to private grain dealers.
  • NASA gets a boost:  NASA would receive $4.79 billion in total for space exploration efforts, a $466 million increase over 2017 funding levels, including $1.35 billion for the Orion Spacecraft for travel to the Moon and Mars.
  • Airport and Airway Taxes:  Omnibus does include a short extension of airport and airway taxes through the end of this fiscal year (9/30/18).
  • Tax Technical Corrections Act of 2018:  JCT explanation of corrections to last year's tax bill.
  • Immigration:  No extension of DACA, but does reauthorize foreign investor visas (EB-5 program) and the E-Verify program, increases temporary worker visas (H-2B), and reauthorizes two other immigration visa programs: one for foreign doctors working at rural hospitals and another for immigrant religious workers.
  • CRS Reports to be made public:  The Legislative Branch title directs the Congressional Research Service to publish all non-confidential reports on a public website operated by the Library of Congress.
  • Kevin and Avonte's Law: Includes legislation helping to protect children with developmental disabilities, and seniors with Alzheimer’s, who are prone to wandering.
  • A slew of reauthorizations and legislative provisions are summarized in this list:  Summary of Legislative FY18 Omnibus Additions
Provisions Not Included:  
  • No Protection for Mueller Investigation: did not include language sought by Democrats that would safeguard Special Counsel Robert Mueller’s investigation into Russia’s meddling in the 2016 election.
  • No Planned Parenthood Ban:  GOP members did not get provisions to cut off funding to Planned Parenthood.
  • No DACA Extension: Democrats did not get DACA protections for the nearly 700,000 young adults brought to the U.S. illegally as children, however the March 5th DACA expiration was rendered temporarily moot when Federal District Court injunctions (left in place by the Supreme Court) required the Administration to continue processing DACA renewals.
  • No Rollback of "Mexico City" Abortion Policy:  Democrats were unable to roll back the Trump Administration expansion of the Reagan Administration's so-called "Mexico City" policy requiring foreign non-governmental organizations (NGOs) receiving U.S. aid to certify that they would not perform or actively promote abortion as a method of family planning—even if the activities were undertaken with non-U.S. funds
  • No Health Insurance Stabilization: No funds to stabilize health insurance markets through cost-sharing reduction (CSR) payments and a reinsurance program promised to Sen. Susan Collins in exchange for her vote on last year's tax bill.  Disagreement over the inclusion of Hyde Amendment abortion funding restrictions is reportedly prevented agreement on the stabilization package as well as House GOP opposition to any measures that stabilize or strengthen Obamacare insurance coverage.
    • On Monday, Sens. Lamar Alexander (R-TN) and Susan Collins (R-ME), and Reps. Greg Walden (R-OR) and Ryan Costello (R-PA) released a package that would have: restored funds for CSRs for three years; provided funding for reinsurance to cover high-cost patients; provided flexibility for states seeking federal waivers; required HHS to issue regulations allowing insurers to sell policies across state lines; and required insurance companies selling short-term insurance plans to prominently disclose that the plans would not meet minimum requirements under the 2010 health law.  CBPP analysis
  • No Rollback of Johnson Amendment that limits political activities of churches and charities.
  • No Internet Taxes:  does not include a measure to require online vendors to collect sales taxes for states in which they don't have a physical presence.  Background: Internet Sales and State Taxes
  • [Back to Top of Page]

Last Week:

  • Last Wednesday, on a vote of 67-31 the Senate passed S. 2155, loosening regulations imposed by the Dodd-Frank Act.  The bill would:
    • relax certain mortgage lending rules;
    • provide regulatory relief to community banks, for example exempting banks with under $10 billion from the Volcker Rule (that restricts banks from making certain kinds of speculative investments that do not benefit their customers);
    • impose additional requirements on credit reporting agencies; and
    • loosen regulations on most banks.
    • The nonpartisan CBO estimates that the probability of a systemically important financial institution failing is "small under current law and would be slightly greater under the legislation."  CRS Summary of the Bill   Bill Text   CBO cost estimate
  • Second round of tax cuts?  President Trump and House Ways and Means Chairman Kevin Brady (R-TX) called for a second round of tax cuts, to make permanent the individual tax cuts expiring in 2025.  Last December's "first round," that provided modest and temporary tax cuts for middle income Americans, while giving large tax cuts to upper-income households, and large and permanent tax cuts to corporations, is projected to add $1.5 trillion to the public debt, pushing total debt to nearly 100% of GDP.  However, a "second round" is unlikely because using a filibuster-proof budget reconciliation bill to make the tax cuts permanent would violate the Senate's Byrd Rule which prohibits using the filibuster-proof process to increase out-year deficits.
  • [Back to Top of Page]
...

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March 20, 2018 / by Charles S. Konigsberg Updated 11:00pm EDT

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Friday Deadline to Avoid Shutdown and Complete $1.3 Trillion Spending Bill

March 23 Deadline to Avoid Shutdown: 

  • The February 9, 2018 Bipartisan Budget Act continued federal funding through this Friday, March 23rd, and set overall levels for defense and non-defense discretionary spending for Fiscal Years '18 and '19, however, it did not appropriate line-item funds for the current fiscal year.  That remains to be done in an FY 2018 omnibus appropriations act that packages together the 12 regular appropriations bills, adjusted upward for the higher spending limits.
  • Last month's spending caps deal freed up an additional $80 billion for defense and $63 billion for non-defense spending for FY'18.
  • Schedule:  it remains unclear whether negotiations can be concluded and legislative language finalized with sufficient time for the House and Senate to complete action by Friday night.  If not, a 6th continuing resolution will be necessary, or the government will shut down at Friday midnight -- as occurred in January.
  • Freedom Caucus Opposition gives Democrats leverage:  Congressional Quarterly reports that House Freedom Caucus Chairman Mark Meadows (R-NC) expects his 30-plus Members to vote against the omnibus due to increases in non-defense spending -- giving leverage to House Democrats whose votes will be needed to secure passage.

Unresolved Spending and Policy Issues: 

  • Border Wall and DACA (Deferred Action for Childhood Arrivals):  White House and GOP conservatives are demanding $25 billion up-front for a border wall. Democrats are opposed to the wall and are seeking protection from deportation for DACA recipients -- people who arrived in the U.S. illegally as children.  However, GOP leaders are not saying whether they are willing to provide any protection for the nearly 700,000 DACA recipients Background: The Administration had planned to end DACA March 5th, however the March 5th DACA expiration was rendered temporarily moot when Federal District Court injunctions (left in place by the Supreme Court) required the Administration to continue processing DACA renewals.   More on DACA and immigration
  • Detention beds for undocumented immigrants:  Also unresolved is the funding level for detention beds for undocumented immigrants held by Immigration and Customs Enforcement (ICE) while awaiting immigration proceedings.
  • Gun Purchases and Background Checks:  Efforts are still being made to include the "FIX NICS" bill (S 2135) that would incentivize states to enter data into the the National Instant Criminal Background Check SystemAnother possible rider is a provision to ban "bump stocks," attachments that can make semi-automatic weapons fire more quickly.
  • Abortion: House wants to include its "conscience clause" provision.  CRS: The History and Effect of Abortion Conscience Clause Laws
  • Family Planning; Planned Parenthood:  Senate bill includes funds for family planning programs, while the House bill provides no money for family planning and prohibits funding for Planned Parenthood.
  • Gateway: New York - New Jersey:  President Trump has threatened to veto the omnibus bill if it includes $900 million to continue funding of the "Gateway project" which is building new commuter rail and transit lines between New York and New Jersey under the Hudson River.  The funding has bipartisan support including House Appropriations Chairman Rodney Frelinghuysen (R-NJ) and Senate Minority Leader Chuck Schumer (D-NY).
  • Spending levels for Opioid abuse prevention and treatment: The February bipartisan budget agreement calls for $6 billion in additional funding over two years to combat the opioid epidemic but some governors are calling this inadequate House Labor-HHS Appropriations Chairman Tom Cole (R-OK) says  negotiators are working through how to allocate the $3 billion for FY'18 among law enforcement, prevention, cure, treatment.
  • Campaign Finance: House Democrats say they oppose GOP riders to eliminate spending limits on coordination between political parties and their candidates, and a rider to repeal the "Johnson Amendment," that prohibits charities from endorsing political candidates. Read the House Democratic Campaign Finance letter
  • Spectrum:  No agreement yet on how much compensation to provide to broadcasters for giving up their portions of the electromagnetic spectrum (frequencies television stations use to air programs). Background
  • Tax - "Grain Glitch" Fix:  a provision is being discussed to address the provision in last year's tax package that gives a sizable tax cut to farmers who sell grain to cooperatives, creating a disparity with sales to private grain dealers.  According to Gov. Edwards of Louisiana, without a fix, "many local and family-owned businesses will be at a distinct competitive disadvantage in the marketplace and will result in lost business and lower wages."
  • Medicare Prescription Drug Pricing:  Still under discussion are provisions to revise payments for drugs in the Medicare Part D program.
  • Sanctuary Cities:  Some House GOP Members want to include provisions to withhold Federal funds from so-called "sanctuary cities," localities which limit their assistance to federal immigration authorities seeking to apprehend and remove unauthorized aliens.

Issues that Are Unlikely to be Addressed in the Omnibus:

  • Health Insurance Stabilization: Congressional Quarterly is reporting the omnibus is unlikely to include funding to stabilize health insurance markets through cost-sharing reduction (CSR) payments and a reinsurance program promised to Sen. Susan Collins in exchange for her vote on last year's tax bill.  Disagreement over the inclusion of Hyde Amendment abortion funding restrictions is reportedly preventing agreement on the stabilization package.
    • On Monday, Sens. Lamar Alexander (R-TN) and Susan Collins (R-ME), and Reps. Greg Walden (R-OR) and Ryan Costello (R-PA) released a package that would: restore funds for CSRs for three years; provide funding for reinsurance to cover high-cost patients; provide flexibility for states seeking federal waivers; require HHS to issue regulations allowing insurers to sell policies across state lines; and require insurance companies selling short-term insurance plans to prominently disclose that the plans would not meet minimum requirements under the 2010 health law.  See the CBPP analysis suggesting the package would raise costs for moderate-income consumers and decrease coverage.
  • Tax Provisions:  Technical Corrections, FAA excise taxes, Internet Taxes:  Despite efforts to include provisions to extend FAA excise taxes that expire March 31,  and correct errors in last year's tax bill, Speaker Paul Ryan (R-WI) has said there will be no tax provisions in the omnibus, and Senate Democratic Leader Schumer has indicated his caucus is not interested in addressing technical fixes without making policy changes to the new tax law.  In addition, also off the table for this negotiation, is a measure to require online vendors to collect sales taxes for states in which they don't have a physical presence.  Background: Internet Sales and State Taxes
  • [Back to Top of Page]

Last Week:

  • Last Wednesday, on a vote of 67-31 the Senate passed S. 2155, loosening regulations imposed by the Dodd-Frank Act.  The bill would:
    • relax certain mortgage lending rules;
    • provide regulatory relief to community banks, for example exempting banks with under $10 billion from the Volcker Rule (that restricts banks from making certain kinds of speculative investments that do not benefit their customers);
    • impose additional requirements on credit reporting agencies; and
    • loosen regulations on most banks.
    • The nonpartisan CBO estimates that the probability of a systemically important financial institution failing is "small under current law and would be slightly greater under the legislation."  CRS Summary of the Bill   Bill Text   CBO cost estimate
  • Second round of tax cuts?  President Trump and House Ways and Means Chairman Kevin Brady (R-TX) called for a second round of tax cuts, to make permanent the individual tax cuts expiring in 2025.  Last December's "first round," that provided modest and temporary tax cuts for middle income Americans, while giving large tax cuts to upper-income households, and large and permanent tax cuts to corporations, is projected to add $1.5 trillion to the public debt, pushing total debt to nearly 100% of GDP.  However, a "second round" is unlikely because using a filibuster-proof budget reconciliation bill to make the tax cuts permanent would violate the Senate's Byrd Rule which prohibits using the filibuster-proof process to increase out-year deficits.
  • [Back to Top of Page]
...

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