Category: Blog

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:

...

read more

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.

...

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 9, 2018 / by Charles S. Konigsberg

Links:

Hot Docs:

Legislative Watch List:

Omnibus Appropriations Act:

...

read more

February 28, 2018 / by Charles S. Konigsberg

Jump to Subjects on this Page:

Hot Docs:

Supreme Court allows DACA renewals to continue, for now:

  • Although the Trump Administration had planned to let DACA protections expire beginning March 5, 2018, judges in California and New York have issued temporary injunctions to keep DACA in place for people already in the program.
    • The injunctions do not, however,  help people who qualified for DACA but did not apply before Sept. 5, 2017.
  • On Monday, Feb. 26, 2018, the Supreme Court let the injunctions remain in place, turning down the Administration's request to lift the injunctions.
  • The Supreme Court action does not resolve the merits of the case;  rather, it means the case will proceed through the normal appeals process and will not reach the Supreme Court until its next term, which begins in October 2018. 
  • Bottom line: the lower court injunctions remain in place, and DACA renewals will remain open, probably into next year.   
  • More DACA Facts
  • [Back to Top of Page]

4 Weeks to Complete FY'18 Appropriations and Avoid Federal Shutdown

  • The February 9, 2018 Bipartisan Budget Act set overall levels for defense and non-defense discretionary spending for FY 2018; it did not appropriate funds for most programs.  That remains to be done in an FY 2018 omnibus appropriations act that will package together the 12 regular appropriations bills, adjusted upward for the higher spending limits.
  • Immigration/DACA: It remains to be seen whether the impasse over DACA, border funding, and immigration reform will hinder the negotiations, although the February 26 Supreme Court decision (see above) may reduce pressure for immigration action in the omnibus bill.  On the other hand, White House pressure for border wall funding may keep the DACA/border-security/immigration issues on the table.
    • Prior to the President's Day recess, after months of negotiations on DACA, border security, and immigration, the Senate voted down two bipartisan plans and defeated the Trump Administration proposal.  Details on the February 15 votes
  • Appropriations Riders:  Appropriations negotiations often face challenges over proposed riders on a slew of controversial issues such as abortion and family planning.  This could now include assault weapons and background checks.
  • Disagreement over "CHIMPs":  Disagreements have arisen during omnibus negotiations over the use of CHIMPs -- Changes in Mandatory Spending Programs (usually entitlements) that score as budget savings, and allow the Appropriations Committee to commit additional discretionary funds while remaining within the statutory spending caps.  According to Congressional Quarterly Sen. Roy Blunt (R-Mo), Chairman of the Labor-HHS Subcommittee, says the GOP has agreed to the use of $14 billion of CHIMPs, while Democrats want $17 billion.  The FY 2018 Budget Resolution permits $17 billion.  FedWeb explanation of CHIMPs
  • Bipartisan Agreement Funds:  Another challenge for negotiators is how to implement several major funding commitments that accompanied the Bipartisan Budget Act in a side agreement:
    • Opioids and Mental Health: $3 billion for FY18 (and $3 billion for FY19) to combat the substance abuse epidemic, including enhanced state grants (with additional assistance for those states with the highest mortality rates and tribes), public prevention programs, and law enforcement activities related to substance abuse and mental health programs;
    • Infrastructure:  $10 billion for FY18 (and $10 billion for FY19) to invest in infrastructure, including programs related to rural water and wastewater, clean and safe drinking water, rural broadband, energy, innovative capital projects, and surface transportation;
    • Child Care: $2.9 billion for FY 18 (and $2.9 billion for FY 19) for child care, including the Child Care and Development Block Grants (CCDBG);
    • Veterans: $2 billion for FY18 (and $2 billion for FY19) to reduce the VA healthcare maintenance backlog;
    • National Institutes of Health: $1 billion for FY18 (and $1 billion for FY19) to support additional scientific research; and
    • College Affordability: $2 billion for FY18 (and $2 billion FY19) for student-centered programs that aid college completion and affordability, including those that help police officers, teachers, and firefighters.
    • [Back to Top of Page]

FY'19 Budget Resolution Unlikely, as new Process Overhaul Effort Begins

  • Typically, in March, Congress' Budget Committees would begin drafting a Congressional Budget Resolution for the upcoming fiscal year beginning October 1 (FY 2019).  The Budget Resolution:
    • sets total federal spending and revenue levels;
    • allocates spending to each Committee, including a lump-sum to the Appropriations Committee for all “discretionary” spending;
    • establishes procedures to enforce the budget blueprint; and
    • may include optional special provisions called “budget reconciliation instructions” aimed at expediting changes to mandatory spending programs (mostly entitlements) or tax laws through a filibuster-proof Budget Reconciliation Bill requiring only 50 votes for Senate passage.
  • Adoption of a congressional budget resolution for FY 2019 is essential only if the GOP wants to use a filibuster-proof Reconciliation bill to advance tax measures, entitlement reforms, or new mandatory spending (for example, infrastructure spending).
  • However, it appears unlikely the House and Senate Budget Committees will advance a budget resolution, because:
    1. The GOP leadership has backed away from entitlement cuts this year;
    2. The decks have been largely cleared of tax legislation with last year’s enactment of tax cutsthe 4th CR’s delay of several Affordable Care Act taxes, and the Bipartisan Budget Act's enactment of tax extenders;
    3. Establishing overall discretionary spending levels — once the domain of the Budget Resolution — is now negotiated through periodic adjustments in the statutory spending caps
    4. There seems to be little GOP interest in new mandatory spending for infrastructure, making a Reconciliation Bill unnecessary; and
    5. The GOP remains deeply split over spending and debt levels and would gain little by teeing up another difficult vote.
  • Does this mean the budget process is fundamentally broken and needs an overhaul?  
    • No, it means there are deep political divisions over fiscal policy -- spending levels and priorities, tax rates, and what levels of debt are sustainable and acceptable.
    • To be sure, there are improvements that can be made, such as an automatic CR to avoid future government shutdowns, repealing the Debt Limit to avoid the repeated financial trauma of a potential Treasury default, and rejuvenating the PAYGO requirements that new tax cuts and mandatory spending be paid for -- although restoring PAYGO is more a matter of political will than process reform.
    • Nevertheless, the fundamentals of the Budget Act -- the Budget Committees, CBO scoring and projections, and annual Budget Resolutions -- remain sound and can easily be used to implement a long-term, bipartisan budget deal (as occurred three times in the 1990s).
    • However, blaming the process is a favorite pastime in Washington and Congress is about to launch a new "Joint Select Committee on Budget and Appropriations Process Reform," as called for in the Bipartisan Budget Act.  Congressional leaders have appointed 4 Republicans and 4 Democrats from each chamber:
      • House GOP:  Budget Chairman Steve Womack, R-Ark.; Rules Chairman Pete Sessions, R-TX; Rob Woodall of Georgia; and Jodey Arrington of Texas.
      • House Dems: Appropriations Ranking Member Nita M. Lowey, D-N.Y.; Budget Ranking Member John Yarmuth, D-Ky.; Lucille Roybal-Allard, D-Calif.; and Derek Kilmer, D-Wash.
      • Senate GOP:  Vice Chair of Rep. Conf. Roy Blunt (R-Mo.), David Perdue (R-Ga.); James Lankford (R-Okla.); and Joni Ernst (R-Iowa).
      • Senate Dems: Sheldon Whitehouse of Rhode Island; Michael Bennet of Colorado; and Brian Schatz and Mazie K. Hirono, both of Hawaii.
    • Link to FedWeb's extensive portal of Budget Process explanations and reform proposals.
    • [Back to Top of Page]
...

read more

February 27, 2018 / by Charles S. Konigsberg

Jump to Subjects on this Page:

Hot Docs:

Supreme Court allows DACA renewals to continue, for now:

  • Although the Trump Administration had planned to let DACA protections expire beginning March 5, 2018, judges in California and New York have issued temporary injunctions to keep DACA in place for people already in the program.
    • The injunctions do not, however,  help people who qualified for DACA but did not apply before Sept. 5, 2017.
  • On Monday, Feb. 26, 2018, the Supreme Court let the injunctions remain in place, turning down the Administration's request to lift the injunctions.
  • The Supreme Court action does not resolve the merits of the case;  rather, it means the case will proceed through the normal appeals process and will not reach the Supreme Court until its next term, which begins in October 2018. 
  • Bottom line: the lower court injunctions remain in place, and DACA renewals will remain open, probably into next year.   
  • More DACA Facts
  • [Back to Top of Page]

4 Weeks to Complete FY'18 Appropriations and Avoid Federal Shutdown

  • The February 9, 2018 Bipartisan Budget Act set overall levels for defense and non-defense discretionary spending for FY 2018; it did not appropriate funds for most programs.  That remains to be done in an FY 2018 omnibus appropriations act that will package together the 12 regular appropriations bills, adjusted upward for the higher spending limits.
  • Immigration/DACA: It remains to be seen whether the impasse over DACA, border funding, and immigration reform will hinder the negotiations, although the February 26 Supreme Court decision (see above) may reduce pressure for immigration action in the omnibus bill.  On the other hand, White House pressure for border wall funding may keep the DACA/border-security/immigration issues on the table.
    • Prior to the President's Day recess, after months of negotiations on DACA, border security, and immigration, the Senate voted down two bipartisan plans and defeated the Trump Administration proposal.  Details on the February 15 votes
  • Appropriations Riders:  Appropriations negotiations often face challenges over proposed riders on controversial issues such as abortion and family planning.  This could now include assault weapons and background checks.
  • Bipartisan Agreement Funds:  In addition, appropriations language must be negotiated to implement several major funding commitments that accompanied the Bipartisan Budget Act:
    • Opioids and Mental Health: $3 billion for FY18 (and $3 billion for FY19) to combat the substance abuse epidemic, including enhanced state grants (with additional assistance for those states with the highest mortality rates and tribes), public prevention programs, and law enforcement activities related to substance abuse and mental health programs;
    • Infrastructure:  $10 billion for FY18 (and $10 billion for FY19) to invest in infrastructure, including programs related to rural water and wastewater, clean and safe drinking water, rural broadband, energy, innovative capital projects, and surface transportation;
    • Child Care: $2.9 billion for FY 18 (and $2.9 billion for FY 19) for child care, including the Child Care and Development Block Grants (CCDBG);
    • Veterans: $2 billion for FY18 (and $2 billion for FY19) to reduce the VA healthcare maintenance backlog;
    • National Institutes of Health: $1 billion for FY18 (and $1 billion for FY19) to support additional scientific research; and
    • College Affordability: $2 billion for FY18 (and $2 billion FY19) for student-centered programs that aid college completion and affordability, including those that help police officers, teachers, and firefighters.
    • [Back to Top of Page]
  • FY'19 Budget Resolution Unlikely, as new Process Overhaul Effort Begins

    • Typically, in March, Congress' Budget Committees would begin drafting a Congressional Budget Resolution for the upcoming fiscal year beginning October 1 (FY 2019).  The Budget Resolution:
      • sets total federal spending and revenue levels;
      • allocates spending to each Committee, including a lump-sum to the Appropriations Committee for all “discretionary” spending;
      • establishes procedures to enforce the budget blueprint; and
      • may include optional special provisions called “budget reconciliation instructions” aimed at expediting changes to mandatory spending programs (mostly entitlements) or tax laws through a filibuster-proof Budget Reconciliation Bill requiring only 50 votes for Senate passage.
    • Adoption of a congressional budget resolution for FY 2019 is essential only if the GOP wants to use a filibuster-proof Reconciliation bill to advance tax measures, entitlement reforms, or new mandatory spending (for example, infrastructure spending).
    • However, it appears unlikely the House and Senate Budget Committees will advance a budget resolution, because:
      1. The GOP leadership has backed away from entitlement cuts this year;
      2. The decks have been largely cleared of tax legislation with last year’s enactment of tax cutsthe 4th CR’s delay of several Affordable Care Act taxes, and the Bipartisan Budget Act's enactment of tax extenders;
      3. Establishing overall discretionary spending levels — once the domain of the Budget Resolution — is now negotiated through periodic adjustments in the statutory spending caps
      4. There seems to be little GOP interest in new mandatory spending for infrastructure, making a Reconciliation Bill unnecessary; and
      5. The GOP remains deeply split over spending and debt levels and would gain little by teeing up another difficult vote.
    • Does this mean the budget process is fundamentally broken and needs an overhaul?  
      • No, it means there are deep political divisions over fiscal policy -- spending levels and priorities, tax rates, and what levels of debt are sustainable and acceptable.
      • To be sure, there are improvements that can be made, such as an automatic CR to avoid future government shutdowns, repealing the Debt Limit to avoid the repeated financial trauma of a potential Treasury default, and rejuvenating the PAYGO requirements that new tax cuts and mandatory spending be paid for -- although restoring PAYGO is more a matter of political will than process reform.
      • Nevertheless, the fundamentals of the Budget Act -- the Budget Committees, CBO scoring and projections, and annual Budget Resolutions -- remain sound and can easily be used to implement a long-term, bipartisan budget deal (as occurred three times in the 1990s).
      • However, blaming the process is a favorite pastime in Washington and Congress is about to launch a new "Joint Select Committee on Budget and Appropriations Process Reform," as called for in the Bipartisan Budget Act.  Congressional leaders last Friday began announcing members, as reported by Congressional Quarterly:
        • House Speaker Paul Ryan (R-WI) named House Budget Chairman Steve Womack, R-Ark., House Rules Chairman Pete Sessions, R-TX, and GOP Reps. Rob Woodall of Georgia and Jodey Arrington of Texas.
        • House Minority Leader Nancy Pelosi selected House Appropriations ranking member Nita M. Lowey, D-N.Y., Budget ranking member John Yarmuth, D-Ky., Lucille Roybal-Allard, D-Calif., and Derek Kilmer, D-Wash.
        • Senate Minority Leader Chuck Schumer, D-N.Y., appointed Senators Sheldon Whitehouse of Rhode Island, Michael Bennet of Colorado, and Brian Schatz and Mazie K. Hirono, both of Hawaii.
        • Senate Majority Leader Mitch McConnell, R-Ky. appointed Sen. Roy Blunt (R-Mo.), the vice chairman of the Senate Republican Conference, and Sens. David Perdue (R-Ga.), James Lankford (R-Okla.) and Joni Ernst (R-Iowa).
      • Link to FedWeb's extensive portal of Budget Process explanations and reform proposals.

      [Back to Top of Page]
...

read more
Senate Ends Filibuster, House Passes Budget Bill, Ending Shutdown

  • Latest Developments:

  • Bipartisan Budget Deal

    • AGREEMENT TO RAISE SPENDING CAPS:  The Senate will vote Thursday on a bipartisan Senate-House Budget Agreement ("Bipartisan Budget Act") raising the statutory caps on discretionary spending by a total of $296 billion over FY'18 and FY'19.
    • Includes a CR until March 23 while the FY'18 omnibus appropriations bill is written:  If the bill is approved, the appropriation of funds under the new caps would be accomplished in a subsequent omnibus appropriations bill for FY '18 to be taken up in March.  In the meantime, the bill would continue government operations at FY '17 levels through March 23 (making this bill a 5th continuing resolution).
    • Background on the discretionary spending caps:
      • "Discretionary spending" is the portion of the Federal budget (about 30 percent) that is appropriated each year by Congress, and is allocated roughly half to defense and half to non-defense programs.  (The remaining  70% of the budget is entitlement programs and interest payments).
      • Defense and non-defense discretionary spending caps were originally put in place in 2011 as part of debt ceiling negotiations, and were lowered further in 2013 (by automatic reductions called "sequestration") when a special congressional committee failed to achieve deficit reduction from entitlement reforms and new revenues.
      • However, Congress quickly backed away from the sequester-level caps on discretionary spending and raised the caps in bipartisan budget agreements in late 2013 (for FY'14 and '15) and again in 2015 (for FY'16 and '17).
      • This Agreement follows the same pattern: bipartisan agreement to raise the defense and non-defense caps for FY'18 and '19.
    • Debt Ceiling Suspension: The bill suspends the Debt Ceiling through March 1, 2019 in order to avert a Treasury default next month -- but this provision could drop out if too many GOP votes would be lost.
    • In addition to raising the caps, the Agreement includes:
      • DISASTER FUNDS: Provides $89.3 billion (more than $8 billion higher than the House-passed bill) in additional emergency funds  for communities impacted by hurricanes, wildfires, and other disasters, including $4.9 billion in increased Medicaid funding for Puerto Rico and the U.S. Virgin Islands (a key concern of Senate Democrats).
      • COMMUNITY HEALTH CENTERS:  provides $7 billion for two years.
      • EXTENDS CHILDREN'S HEALTH INSURANCE PROGRAM (CHIP) AN ADDITIONAL 4 YEARS for a total authorization of 10 years when added to provisions in the January CR.
      • OPIOID FUNDING:  agreement assumes that appropriators will provide $6 billion over two years by funding grants, opioid prevention programs, and law enforcement efforts.
      • INFRASTRUCTURE:  agreement assumes that appropriators will provide $20 billion for infrastructure projects such as highways and bridge construction and repair, water and wastewater projects, and rural broadband.
      • CHILD CARE:  agreement assumes that appropriators will provide $5.8 billion for Child Care Development Block Grants.
      • VETERANS:  agreement assumes that appropriators will provide $4 billion for veterans hospitals and clinics and $4 billion to address a VA maintenance backlog.
      • NATIONAL INSTITUTES OF HEALTH: agreement assumes that appropriators will provide $2 billion for NIH.
      • COLLEGE AFFORDABILITY:  agreement assumes that appropriators will provide $4 billion for college affordability programs including for police officers, firefighters and teachers.
      • TAX EXTENDERS:  includes a one-year extension of tax provisions that expired in 2016 to "help families, individuals and small businesses."
      • REPEAL OF IPAB:  The bill repeals the Independent Payment Advisory Board (IPAB) established by the Affordable Care Act to develop cost-containment measures for Medicare.  Opponents of IPAB have complained about the authority of IPAB to put cost containment measures into effect unless replaced or overturned by Congress. Background on IPAB
      • AID TO FARMERS:  The bill includes $1.1 billion in aid for dairy farmers and cotton farmers.  Background on Farm Safety Net Programs
      • MEDICARE:  "Structural reforms" and "Medicare extenders" are included in the bill language, including closing the Medicare prescription drug "donut hole" for 2019.
      • SELECT COMMITTEE ON PENSIONS to be established to develop legislation to address multiemployer pension plans (background on Multiemployer Defined Benefit Pension Plans and Multiemployer Composite Plans).
      • SELECT COMMITTEE ON BUDGET PROCESS to consider budget process and appropriations reform legislation.
    • Link to Appropriations Portal and Summary of the four FY'18 CRs
  • DACA/Immigration

    • Feb. 6:  No DACA Extension:  Politico reports that White House Chief of Staff Kelly made the assertion that President Trump lacks the authority to extend his own March 5 deadline for Congress to enact DACA legislation.
    • Feb. 5:  Senators McCain (R-AZ) and Coons (D-DE) offered bipartisan starting point with path to citizenship for “dreamers” and border security measures but White House immediately rejected the proposal due to no funding for "desperately needed WALL."  Details
    • Jan. 25: White House counter-offer proposed: (1) 10-12 year path to citizenship for 1.8 million young undocumented immigrants(2) $25 billion for a border wall(3) ending the diversity visa lottery program, and (4) terminating family-based immigration for parents and siblings.
    • Jan. 23: White House press secretary Sanders rejected the bipartisan Graham-Durbin Senate DACA compromise as "totally unacceptable to the president and should be declared dead on arrival.”
    • Jan. 22:  The McConnell commitment on DACA: "Should these issues not be resolved by the time the funding bill before us expires on Feb. 8, so long as the government remains open, it would be my intention to take up legislation here in the Senate that would address DACA, border security and related issues as well as disaster relief....this immigration debate will have a level playing field at the outset and an amendment process that is fair to all sides.”
    • Link to Immigration - DACA Facts
  • Debt Ceiling Needs to be Raised by Early March to Avoid U.S. Default

    • Jan. 31, 2018:  CBO issued a report projecting that "if the debt limit remains unchanged, the ability to borrow using extraordinary measures will be exhausted and the Treasury will most likely run out of cash in the first half of March 2018." (emphasis added)
    • Jan. 30, 2018:  Treasury Sec. Mnuchin sent a letter to Congress notifying them of cash management actions to sustain Treasury operations through Feb. 28, 2018 and urging Congress to "increase the debt ceiling as soon as possible."
    • Failure to raise the debt ceiling would result in a default by the U.S. Treasury. Default has never occurred and would have catastrophic effects on the ability of the U.S. Treasury to issue bonds in the future, as well as destabilizing global financial markets.
    • For up-to-date developments, see the U.S. Treasury's Debt Limit page
    • Background: What is the Debt Ceiling?
  • FY'19 Budget:  Feb. 12 Transmittal; Budget Resolution Unlikely

    • FY 2019 President's Budget next Monday, Feb. 12:  While funding for FY 2018 remains incomplete, the budget process for FY 2019 begins on Feb. 12 with transmittal of the President's FY 2019 Budget (missing the Feb. 5 statutory deadline by a week).
    • FY 2019 Budget Resolution?  Adoption of a congressional budget resolution for FY 2019 is essential if the GOP wants to use a filibuster-proof Reconciliation bill to advance any tax measures, entitlement reforms, or new mandatory spending (for example, infrastructure spending).  However, it remains unclear if the House and Senate Budget Committees will advance a budget resolution, because:
      1. the GOP leadership has backed away from entitlement cuts this year;
      2. the decks have been largely cleared of tax legislation with last year's enactment of tax cuts and the recent CR's delay of several Affordable Care Act taxes; and
      3. setting overall discretionary spending levels -- once the domain of the Budget Resolution -- is now negotiated through periodic adjustments in the statutory spending caps.
    • Congressional Budget Chairmen are reticent about an FY 2019 Budget Resolution:  Congressional Quarterly reports that House Budget Committee Chairman Steve Womack (R-Ark) has cited the difficulty of passing a budget in an election year and the lack of appetite "to confront something as challenging as the fiscal imbalance in America right now," and Senate Budget  Chairman Enzi (R-WY) has said an FY 2019 reconciliation bill is not a priority.  Roll Call reports that Womack reiterated his lack of interest in a Budget Resolution on February 1 at the House GOP retreat.
...

read more
House, Senate, White House on separate tracks as Thursday night shutdown looms

Click & Print: 2018 HOUSE-SENATE CALENDAR

  • House Passes Defense-CR-Health Bill; Senate Nearing Deal on Spending Caps; President Threatens Shutdown

    • PRESIDENT THREATENS SHUTDOWN OVER BORDER WALL: 
    • HOUSE PASSES DEFENSE-CR-HEALTH BILL: 
      • A few hours after the President's comment, the House passed, on a mostly party line voteHR 1892 -- a bill  that includes full-year defense funding with significant increases above the statutory spending limits.  However, for non-defense discretionary programs the bill includes only flat, temporary funding through March 23. 
      • Read the Text of the Defense-CR   •   Read the Section-by-Section Summary
      • The bill also includes $3.6 billion in FY 2018 and FY 2019 for Community Health Centers; funding for National Health Service Corps and teaching hospitals; permanent repeal of the Medicare cap on therapy services; a "rifle shot" tax provision for an unnamed corporation; 344 pages of legislation making numerous changes to Medicare, Medicaid, Child and Family Services, Foster Care and Adoption Assistanceand misc. provisions relating to the Southeastern Power Administration, the 2020 Census ($51m to avoid delays), the Strategic Petroleum Reserve, federal jurors, SBA disaster loans $225m), and the environmental quality incentive program.
      • The House-passed bill notably does not include a needed increase the debt ceiling.
    • SENATE NEARING BROAD BUDGET AGREEMENT:  
      • At the same time, Senate and House negotiators may be nearing a broader budget deal to raise spending limits for both defense and non-defense spending.  On Tuesday, after a meeting of Senate Leaders, Sen. McConnell (R-KY) told reporters "I'm optimistic that very soon we'll be able to reach an agreement" and Sen. Schumer (D-NY) said we "are closer to an agreement than we have ever been."
      • Congressional Quarterly reports that under the potential deal, the FY '18 defense cap would be raised by $80 billion and the nondefense cap by $63 billion, and the FY '19 caps by a bit more.
      • There is an informal agreement that some of the non-defense increase would be directed to opioid abuseveterans, National Institutes of Health (NIH), and infrastructure projects.
      • The deal may also include a suspension of the debt ceiling until after the election, additional disaster relief, an extension of certain expiring tax provisions, and a delay in cuts to Medicaid DSH payments.
      • If the potential deal is reached, Democrats would have achieved "parity" because each cap will be raised by $26 billion above the original spending caps in the 2011 Budget Control Act (before the sequester triggered in 2013 reduced the caps substantially).  See our explanation of Parity and the Spending Caps
      • If a deal is concluded, the Senate would take up the House-passed bill, strip out the full-year defense appropriations, apply the 6-week CR to all federal operations, insert the new FY'18 and FY'19 spending caps, add debt ceiling, disaster relief, and other agreed provisions, keep the funding for health centers/health corps/teaching hospitals, and send the bill back to the House.
      • It is unclear if the Senate would keep or strip out the 344 pages of legislation making numerous amendments to Medicare, Medicaid, Child and Family Services, Foster Care and Adoption Assistance.
      • There is no bipartisan deal on DACA/immigration/border security to include in the CR (so the Senate would take up immigration separately, per the January shutdown deal).
    • POSSIBLE OUTCOME:
      • If the Senate-amended CR (described above) arrives in the House on Thursday, it is likely that many or most Freedom Caucus conservatives would vote against the bill because it does not include full-year defense funding, increases non-defense caps, and suspends the debt ceiling, but most Republicans would be likely to vote for it due to the large increase in the defense caps; and enough Democrats would be likely to support it due to urgently needed health funding and increases in the non-defense caps (although some may oppose it because it does not resolve DACA).
      • Whether the President would sign the bill, in view of his statements on "Wall" funding, is unclear.
    • Link to Appropriations Portal and Summary of the four FY'18 CRs
  • DACA/Immigration

    • Feb. 6:  No DACA Extension:  Politico reports that White House Chief of Staff Kelly made the assertion that President Trump lacks the authority to extend his own March 5 deadline for Congress to enact DACA legislation.
    • Feb. 5:  Senators McCain (R-AZ) and Coons (D-DE) offered bipartisan starting point with path to citizenship for “dreamers” and border security measures but White House immediately rejected the proposal due to no funding for "desperately needed WALL."  Details
    • Jan. 25: White House counter-offer proposed: (1) 10-12 year path to citizenship for 1.8 million young undocumented immigrants(2) $25 billion for a border wall(3) ending the diversity visa lottery program, and (4) terminating family-based immigration for parents and siblings.
    • Jan. 23: White House press secretary Sanders rejected the bipartisan Graham-Durbin Senate DACA compromise as "totally unacceptable to the president and should be declared dead on arrival.”
    • Jan. 22:  The McConnell commitment on DACA: "Should these issues not be resolved by the time the funding bill before us expires on Feb. 8, so long as the government remains open, it would be my intention to take up legislation here in the Senate that would address DACA, border security and related issues as well as disaster relief....this immigration debate will have a level playing field at the outset and an amendment process that is fair to all sides.”
    • Link to Immigration - DACA Facts
  • Debt Ceiling Needs to be Raised by Early March to Avoid U.S. Default

    • Jan. 31, 2018:  CBO issued a report projecting that "if the debt limit remains unchanged, the ability to borrow using extraordinary measures will be exhausted and the Treasury will most likely run out of cash in the first half of March 2018." (emphasis added)
    • Jan. 30, 2018:  Treasury Sec. Mnuchin sent a letter to Congress notifying them of cash management actions to sustain Treasury operations through Feb. 28, 2018 and urging Congress to "increase the debt ceiling as soon as possible."
    • Failure to raise the debt ceiling would result in a default by the U.S. Treasury. Default has never occurred and would have catastrophic effects on the ability of the U.S. Treasury to issue bonds in the future, as well as destabilizing global financial markets.
    • For up-to-date developments, see the U.S. Treasury's Debt Limit page
    • Background: What is the Debt Ceiling?
  • FY'19 Budget:  Feb. 12 Transmittal; Budget Resolution Unlikely

    • FY 2019 President's Budget next Monday, Feb. 12:  While funding for FY 2018 remains in limbo, the budget process for FY 2019 begins on Feb. 12 with transmittal of the President's FY 2019 Budget (missing the Feb. 5 statutory deadline by a week).
    • FY 2019 Budget Resolution?  Adoption of a congressional budget resolution for FY 2019 is essential if the GOP wants to use a filibuster-proof Reconciliation bill to advance any tax measures, entitlement reforms, or new mandatory spending (for example, infrastructure spending).  However, it remains unclear if the House and Senate Budget Committees will advance a budget resolution, because:
      1. the GOP leadership has backed away from entitlement cuts this year;
      2. the decks have been largely cleared of tax legislation with last year's enactment of tax cuts and the recent CR's delay of several Affordable Care Act taxes; and
      3. setting overall discretionary spending levels -- once the domain of the Budget Resolution -- is now negotiated through periodic adjustments in the statutory spending caps.
    • Congressional Budget Chairmen are reticent about an FY 2019 Budget Resolution:  Congressional Quarterly reports that House Budget Committee Chairman Steve Womack (R-Ark) has cited the difficulty of passing a budget in an election year and the lack of appetite "to confront something as challenging as the fiscal imbalance in America right now," and Senate Budget  Chairman Enzi (R-WY) has said an FY 2019 reconciliation bill is not a priority.  Roll Call reports that Womack reiterated his lack of interest in a Budget Resolution on February 1 at the House GOP retreat.
  • Last Week: CFPB Held Constitutional, GOP Senators Defend NAFTA

    • CFPB Ruled Constitutional:  Last week, the D.C. Circuit Court of Appeals ruled 7-3 that a provision in the 2010 Dodd-Frank law that limits the president’s ability to remove the Consumer Financial Protection Bureau (CFPB) director does not violate the authority to appoint and remove executive branch officers, overturning a 2016 ruling.  Details  Background on CFPB
    • Three dozen Senate Republicans called on President Trump to preserve the North American Free Trade Agreement (NAFTA). “The next step to advance the economy requires that we keep NAFTA in place, but modernize it to better reflect our 21st century economy,” the 36 senators wrote.  Text of the letter    FedWeb International Trade Portal
...

read more