Category: Blog
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.
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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
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FedWeb's updates on fiscal, economic, and domestic policy developments are now available below in our new "FedWeb.com Tip Sheet."

Coming soon in this spaceFrom-the-Center blog

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House to Vote on Defense-CR Likely to Fail in Senate; DACA impasse continues; Debt Ceiling Looms

Click & Print: 2018 HOUSE-SENATE CALENDAR

  • House Proposes Full-Year Defense Increases; Temporary, Flat Funding for Non-Defense; Funding Extension for Community Health; Extensive Changes to Medicare, Medicaid, Family Services

    • Funding for federal agencies and programs expires Thursday at midnight under the current continuing resolution (CR).
    • Bowing to conservatives, the House Rules Committee will consider on Tuesday a bill that includes full-year defense funding with significant increases above the statutory spending limits, but no increases and temporary (6-week) funding through March 23 for non-defense discretionary programs.  
    • The defense funding in the bill violates the current statutory spending caps and will not be approved in the Senate because negotiators have not yet reached bipartisan agreement on increases to the statutory defense and non-defense spending caps for FY 2018 and 2019.   Democrats are seeking parity in defense and non-defense increases.
    • The House bill includes defense appropriations for FY 2018 at levels that violate the current statutory spending caps and will not be approved in the Senate because bipartisan agreement has yet to reached on both defense and non-defense spending caps -- with Democrats insisting on parity.
    • Bill provides $3.6 billion in FY 2018 and FY 2019 for Community Health Centers.
    • Bill extends funding for National Health Service Corps and teaching hospitals.
    • Includes a "rifle shot" tax provision aimed at adjusting estimated taxes for an unnamed corporation.
    • Includes provisions impacting the Southeastern Power Administration, the 2020 Census, the Strategic Petroleum Reserve, federal jurors, SBA disaster loans, and the environmental quality incentive program.
    • Includes 344 pages of legislation impacting Medicare, Medicaid, Child and Family Services, Foster Care and Adoption including:
      • changes to child and family services support, foster care, adoption, legal guardianship, and child support enforcement fees;
      • five-year extensions of rural home health and ground ambulance add-ons under Medicare;
      • extension of other Medicare reimbursement policies for two years, including the Geographic Practice Cost Index;
      • permanent repeal of the Medicare payment cap for therapy services;
      • permanent removal of the Medicare rental cap for durable medical equipment for speech generating devices;
      • permanent extension of special needs plans in Medicare Advantage;
      • elimination of fiscal 2018 and 2019 Disproportionate Share Hospital (DSH) reductions under Medicaid; and
      • provisions relating to the Medicare-dependent hospital program, inpatient hospital payments, ambulance services, home health payment reforms; cardiac rehabilitation reforms, home dialysis, chronically ill enrollees, accountable care organizations, telehealth, home infusion therapy services, durable medical equipment, fraud and abuse measures, diabetic testing strips, prison data reporting; hospice care, third party liability in Medicaid and CHIP, biosimilars in Medicare Part D, and funding of the prevention and public health fund [Read the Section-by-Section Summary]
    • The bill notably does not include a needed increase the debt ceiling.
  •  Negotiations on funding for the remainder of FY 2018 continue to be mired in disagreements over:

  • DACA/Immigration

    • Feb. 5:  McCain (R-AZ) -Coons (D-DE) offered bipartisan starting point with path to citizenship for “dreamers” and border security measures but White House immediately rejects due to no funding for "desperately needed WALL."  Details
    • Jan. 25: White House counter-offer proposes (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 on 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
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Big Defense Increases; CR Expires 2/8; Another CR Likely Thru March; Debt Ceiling Looms; Budget Res. Unlikely

Click & Print: 2018 HOUSE-SENATE CALENDAR

  • GOP Proposing $80 billion Defense Increase

    • Congressional Quarterly reports that GOP negotiators have proposed raising FY 2018 discretionary spending $143 billion, with defense spending increasing $80 billion and non-defense increasing $63 billion--and similar increases in FY 2019.   Current Budget Control Act caps on spending are:
    • Escalating Defense Cap:  The Administration proposed raising the FY'18 defense cap by $46 billion.  The initial GOP congressional proposal was an increase of $54 billion.  The Defense Authorizations Act proposed an increase of $70 billion.  The latest GOP proposal is $80 billion, i.e. boosting base defense spending by nearly 15 percent in a single year. 
      • The proposed increase is unrelated to operations in Afghanistan, Iraq, Syria and elsewhere, which are funded outside of the budget caps as "overseas contingency operations (OCO)."  The Administration requested an OCO budget for FY'18 of $65 billion on top of the base budget.
    • Advocates for large increases argue that insufficient funding for training, maintenance, and modernization has lead to a "military readiness crisis" and that current threats from N. Korea and other hot spots require a military buildup.
    • At the same time, the U.S. currently spends more on defense than the next 8 countries combined (China, Russia, Saudi Arabia, India, France, UK, Japan, Germany), and the U.S. economy faces escalating and unsustainable budget deficits.
    • For facts on U.S. defense spending, see our updated Defense Spending Webpage.
  • CR Expires Thursday; Next CR likely thru March 23

  • Debt Ceiling Needs to be Raised by Early March

    • 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 on 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 enactment of delays/suspension 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.
    • The wild card here is infrastructure:  If the Administration and Congress want to enact a major infrastructure bill that includes tax incentives and/or new mandatory spending, an FY 2019 Budget Resolution and Reconciliation Bill could expedite the process.
    • However, the 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
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Countdown to February 8th: Parity, DACA, Disaster-Aid, Community Health; Debt Ceiling

Click & Print: 2018 HOUSE-SENATE CALENDAR

  • Countdown to February 8th - Negotiations on Defense/Non-Defense Parity, DACA, Disaster Aid, Community Health

  • Jan. 30 State of the Union and Feb. 12 President's Budget

    • FY 2019 President's Budget on 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).
    • State of the Union: Key items in the President's Budget, including infrastructure, are likely to be highlighted in the Jan. 30 State of the Union Address.
    • 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 (see below);
      2. the decks have been largely cleared of tax legislation with last year's enactment of tax cuts and this week's enactment of delays/suspension 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 adjustment in the statutory spending caps.
    • The wild card here is infrastructure:  If the Administration and Congress want to enact a major infrastructure bill that includes tax incentives and/or new mandatory spending, an FY 2019 Budget Resolution and Reconciliation Bill could expedite the process (see below for more on infrastructure).
    • However, the 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.
  • Debt Ceiling May Need to be Raised by Early March:

  • House GOP Backs Away from Social Security and Medicare Cuts

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Countdown to February 8th: Parity, DACA, Disaster-Aid, Community Health; Debt Ceiling

Click & Print: 2018 HOUSE-SENATE CALENDAR

  • Countdown to February 8th - Negotiations on Defense/Non-Defense Parity, DACA, Disaster Aid, Community Health

  • Jan. 30 State of the Union and Feb. 12 President's Budget

    • FY 2019 President's Budget on 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).
    • State of the Union: Key items in the President's Budget, including infrastructure, are likely to be highlighted in the Jan. 30 State of the Union Address.
    • 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 (see below);
      2. the decks have been largely cleared of tax legislation with last year's enactment of tax cuts and this week's enactment of delays/suspension 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 adjustment in the statutory spending caps.
    • The wild card here is infrastructure:  If the Administration and Congress want to enact a major infrastructure bill that includes tax incentives and/or new mandatory spending, an FY 2019 Budget Resolution and Reconciliation Bill could expedite the process (see below for more on infrastructure).
    • However, the 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.
  • Debt Ceiling May Need to be Raised by Early March:

  • Trade: Trump Imposes Tariffs

    • U.S. Trade Representative Robert Lighthizer, announcing the new tariffs, accused China and the South Korean firms LG and Samsung of unfair trade practices including large government subsidies.  USTR fact sheet
    • Solar Tariffs:
      • 30% Tariffs imposed on imported solar cells and modules, falling to 15% by the 4th year.
      • Based on 2017 findings of the independent International Trade Commission.
      • China makes more than 2/3 of the world's solar panels.  Other countries impacted by the solar tariffs are Malaysia and S. Korea.
      • Could Impact U.S. jobs:  While these tariffs may help U.S. production become more competitive with imports, the cost of installing solar systems is likely to rise -- impacting solar sales and installation jobs, as well as slowing the transition to climate-friendly green energy.  The Solar Energy Industries Association, which opposes the Trump move, says it will cost "tens of thousands" of American jobs.
    • Washing Machine Tariffs:
      • In the first year, the first 1.2 million of imported washing machines will face a tariff of 20%, with subsequent imports facing 50% -- falling to 40% by the third year.
      • The case was brought by Whirlpool in response to rising imports of LG and Samsung washers, both S. Korean firms.
    • What is a Section 201 Trade Case?  The tariffs were imposed under section 201 of the Trade Act of 1974, which authorizes temporary import relief (such as tariffs) in situations where surges of specific imported products are causing “serious injury” to an American industry; the objective is to give domestic industry time to adjust to the surge in competition.
      • A representative of the industry may petition the independent U.S. International Trade Commission (ITC) to investigate whether trade relief is necessary and make recommendations to the President. Background on Trade Remedies
      • The last time Section 201 was used was in 2002 by President Bush in response to steel import surges, although the tariffs were withdrawn in 2003 after the WTO ruled against the U.S. and retaliatory measures were threatened.
    • China evaded prior actions:  The Obama Commerce Dept. found in 2012 that China had subsidized its solar producers, that those producers were selling their goods in the United States for less than their fair market value, and imposed antidumping and countervailing duties.  However, the Trump Administration contends that "Chinese producers evaded the duties through loopholes and relocating production to Taiwan."
    • Demise of the U.S. solar industry:  According to USTR, by 2017, the U.S. solar industry had almost disappeared, with 25 companies closing since 2012, and only two producers of both solar cells and modules, and eight firms that produce modules using imported cells, remaining viable.
    • Does this comply with global trade agreements?  The WTO (World Trade Organization) Safeguards Agreement allows measures of this type provided they are time-limited and imposed only when imports are found to cause or threaten serious injury to a domestic competing industry.  China and South Korea are both expected to seek WTO review of the U.S. actions.
    • President's authority: The Constitution gives Congress the power to impose and collect duties and "to regulate commerce with foreign nations," although Congress has delegated to the President the power to modify tariffs when certain findings are made. Background: Presidential Authority over Trade - Imposing Tariffs and Duties
    • Are Steel and Aluminum Next?  In 2017, the Trump Administration opened an investigation into how much steel and aluminum the U.S. needs to protect its national security.
    • FedWeb International Trade Webpage
  • House GOP Backs Away from Social Security and Medicare Cuts

  • Deficits Returning to $1 Trillion/Year; and Total Debt Nearing 100% of Economy within a Decade

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