This Week on the Hill
The House and Senate are in this week, with a focus on the fiscal year 2018 budget.
The House convenes today and will consider six bills under suspension of the rules, mostly related to land management. On Tuesday the chamber will consider four bills under suspension of the rules followed by H.R. 36, which restricts abortion after 20 weeks of pregnancy. For Wednesday and the balance of the week, the House will consider its version of the fiscal year 2018 budget resolution (see story below). Several committees have scheduled hearings this week: the Small Business Committee will hold a hearing Wednesday on small business tax reform; the Science, Space and Technology Committee will hold a hearing Tuesday on resiliency of the electric grid; and the Energy and Commerce Committee will hold a hearing Wednesday on the air quality impacts of wildfires.
The Senate convenes today to consider the nomination of Ajit Pai to sit on the Federal Communications Commission, with a vote scheduled for 5:30 pm. Several committees have scheduled hearings this week: the Energy and Natural Resources Committee will hold a hearing Tuesday on energy storage technologies; the Health, Education, Labor and Pensions Committee will hold a hearing Tuesday on state innovation under the Every Student Succeeds Act; and on Thursday will hold a hearing on the federal response to the opioid crisis.
Fiscal Year 2018 Budget Update
Budget action is expected in both chambers this week to lay the groundwork for tax policy changes. The House is scheduled to consider H.Con.Res. 71 beginning on Wednesday, which was approved by the House Budget Committee in July. Their version of the budget resolution sets topline spending levels of $621.5 billion for defense and $511 billion for nondefense discretionary spending, which is not aligned with the Budget Control Act. The resolution also contains instructions to 11 committees to find a total of $203 billion in mandatory spending savings during the next decade. The Senate Budget Committee introduced a draft budget resolution on Friday, which sets topline spending levels in line with the Budget Control Act: $549 billion for defense and $516 billion for nondefense discretionary. The resolution also includes reconciliation instructions to the Finance Committee for $1.5 trillion in comprehensive tax reform and to the Energy and Natural Resources Committee for $1 billion in deficit reduction. A markup is scheduled for Wednesday and Thursday and the full Senate could vote on the measure the week of October 16. Due to the differences between the chambers, a conference committee will be required to reach consensus on a budget resolution that begins the reconciliation process for tax policy changes.
Several Programs Expired September 30, Awaiting Reauthorization
With the end of the federal fiscal year on Saturday, September 30, several programs awaiting reauthorization expired. The Children’s Health Insurance Program (CHIP) will be a focus this week, as the House Energy and Commerce Committee plans a markup of legislation to renew the program on Wednesday, with language expected to be released today. The Senate Finance Committee will hold a markup Wednesday on S. 1827, the Keeping Kids’ Insurance Dependable and Secure Act. The National Governors Association released a statement last week on the need to reauthorize CHIP. Another program expiring Saturday provides funding for community health centers, which was started under the Affordable Care Act and renewed in 2015; a bipartisan group of 70 senators sent a letter on September 20 calling for the extension of funding for this program. The House bill is expected to include an extension of funding for community health centers as well as CHIP. The Perkins Loan program for higher education also expired on September 30; a bipartisan group of legislators are attempting to extend the program that provides financial aid for tens of thousands of college students. Meanwhile, cuts to disproportionate share hospital, or DSH payments, are slated to take effect on October 1, which begins a series of yearly cuts that would reduce the approximately $12 billion program by two-thirds by 2025.
Administration and Congressional Leadership Release Tax Framework
On Wednesday the administration and Congressional Republican leadership released a tax policy framework, with many of the details waiting to be determined through the committee process. The framework from the “Big 6” would eliminate most itemized deductions, while maintaining deductions for mortgage interest and charitable giving. Other major provisions include: doubling the standard deduction and eliminating personal exemptions; consolidating the current seven tax brackets for individuals to three brackets of 12, 25 and 35 percent; reducing the corporate rate from 35 percent to 20 percent; and repealing the estate tax. The nine-page framework can be found here and the highlights can be found here. An analysis from the Committee for a Responsible Federal Budget estimates the plan will result in about $2.2 trillion of net tax cuts while an analysis from the Tax Policy Center found the plan will reduce federal revenue by $2.4 trillion over the next decade.
Congress Approves Six-Month FAA Extension
On Thursday Congress passed a six-month extension of the Federal Aviation Administration (FAA) (through March 2018), which had been set to expire on September 30. The bill (H.R. 3823) as ultimately passed by both chambers does not include a provision that would have expanded private flood insurance under the National Flood Insurance Program; this was in the bill as first passed by the House, but was removed by the Senate. The measure includes tax benefits for victims of hurricane damage, allowing disaster victims to take money out of their retirement funds without paying early-withdrawal penalties. The bill also renews some health care programs, including teaching health centers that operate graduate medical education programs, the Special Diabetes Program for Indians, and a Medicare at-home demonstration program.
President Expected to Issue Executive Order on Health Care Associations, Other Changes
The President announced on Wednesday he plans to issue an executive order, possibly this week, to allow health insurance to be purchased across state lines. He also indicated he is considering an executive order on health care associations, which would allow organizations to band together to buy insurance. This could potentially be attempted by loosening restrictions under the Employee Retirement Income Security Act (ERISA), which lets companies purchase insurance across state lines for their employees. An issue brief from the American Academy of Actuaries on association health plans can be found here. Meanwhile, Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) are looking to resume bipartisan negotiations on a bill to stabilize the Affordable Care Act (ACA).
Houses Passes Home Visiting Reauthorization with New State Match
Last week the House approved H.R. 2824, the Increasing Opportunity through Evidence-Based Home Visiting Act, by a vote of 214-209. This bill reauthorizes the Maternal, Infant, and Early Childhood Home Visiting program, which expired on September 30, for five years at the current annual $400 million allotment. The bill adds a new state matching requirement for program activities that would begin at 30 percent in 2020, increasing to 50 percent by 2022. The funding for the bill is offset by H.R. 2792, which prohibits Supplemental Security Income payments to people with an outstanding warrant for a felony or for violating a condition of probation or parole. H.R. 2824 now moves to the Senate for consideration, where a reauthorization bill (S. 1829) was introduced that does not include the state matching requirement.
Senate Commerce Committee Introduces Self-Driving Vehicle Legislation
On Thursday Senator John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science and Transportation, and Senator Gary Peters (D-MI) introduced S. 1885, the American Vision for Safer Transportation Through Advancement of Revolutionary Technologies (AV START) Act. The bill intends to begin the process of federal regulation of self-driving vehicles, but will not apply to heavy trucks. Under the legislation, the U.S. Department of Transportation would have the authority over setting safety standards for the industry, while states would maintain their roles in determining traffic laws, registration and licensing. The committee will hold a markup of the legislation on Wednesday. The full text of the bill can be found here and a section-by-section summary can be found here. The House passed their version of a bill regulating self-driving vehicles, the SELF DRIVE Act, on September 7.
President Signs STEM Education Directive
Last Monday the President signed a presidential memorandum on increasing access to high-quality science, technology, engineering, and mathematics (STEM) education. The memorandum directs the Secretary of Education to establish promotion of high-quality STEM education, with a particular focus on computer science, as a Department of Education priority. The secretary must also establish a goal of devoting at least $200 million in existing grant funds per year to the promotion of high-quality STEM education, beginning with fiscal 2018 funds.
VW Settlement Approved by District Court
Last month the U.S. District Court for the Northern District of California approved a trust as a result of two settlements with Volkswagen over allegations of cheating emissions tests and deceiving customers. Of the total $14.9 billion, approximately $2.9 billion will be set aside for an Environmental Mitigation Trust Agreement, which will be allocated among states, territories, and tribes to fund environmental mitigation projects that reduce emissions of nitrogen oxides. The court order set the trust’s effective date as October 3, 2017; states must elect to become beneficiaries within 60 days of the effective date to access funds. The National Association of State Energy Officials and National Association of Clean Air Agencies launched a Volkswagen Settlement Clearinghouse as an online resource for state and local governments as they develop plans and projects under the trust.
Secretary DeVos Rescinds Obama Guidance on Campus Sexual Assault
The Education Department recently rolled back Obama-era guidance on campus sexual assault, replacing them with temporary measures that increase the standard for proving sexual misconduct. The department is currently developing a regulation under Title IX, which deals with sexual discrimination, on how schools should handle sexual assault allegations. The new interim Q&A intends to assist schools on how to investigate and adjudicate allegations of campus sexual assault under federal law. The department is withdrawing the Dear Colleague Letter on Sexual Violence dated April 4, 2011, and the Q&A on Title IX Sexual Violence dated April 29, 2014, stating “the withdrawn documents ignored notice and comment requirements, created a system that lacked basic elements of due process and failed to ensure fundamental fairness.”
Administration Allows Greenhouse Gas Emission Rule to Take Effect
On Thursday the Department of Transportation Federal Highway Administration published a final rule in the Federal Register announcing the effective date for portions of the regulation related to greenhouse gas emissions along highways. The Trump administration had initially delayed implementation of a rule aimed at reducing emissions from major highways before eventually placing the rule on indefinite hold earlier this year. However, as published last week, the rule will now be effective as of September 28, 2017. Under the rule, states would be required to measure greenhouse gas emissions related to the use of public highways.
Interior Awards $94.3 Million to States and Territories for Parks and Outdoor Recreation
Last month Interior Secretary Ryan Zinke announced that $94.3 million will be distributed for outdoor recreation and conservation projects to the states, territories and the District of Columbia from the Land and Water Conservation Fund. Monies for the fund are generated through offshore oil and gas leasing. The funds enable state and local governments to improve existing parks and other recreation areas while also allowing the expansion or development of parks, trail systems, and recreation opportunities. The allocation for the State and Local Assistance grant program is determined based on a formula set in law. A list of individual allocations is included in the release.
Recently Released Reports
Upward Mobility and State-Level EITCs: Evaluating California's Earned Income Tax Credit
Urban Institute
Policy Snapshot: Outcomes-Based Funding
Education Commission of the States
Realizing the Full Vision of School Discipline Reform: A Framework for Statewide Change
Council of State Governments Justice Center
Budget Uncertainty and Disruptions Affect Timing of Agency Spending
U.S. Government Accountability Office
Putting Private Capital to Work in Rural Infrastructure
Bipartisan Policy Center
Economic News
Third Estimate Shows GDP Increased More in Second Quarter 2017
Recently released data from the Department of Commerce Bureau of Economic Analysis shows that real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the second quarter of 2017. Gross domestic product is the value of the goods and services produced by the nation’s economy less the value of goods and services used up in production. This information is based on the “third” estimate, which is derived from more complete source data than were available for the “second” estimate issued last month, which showed an increase of 3.0 percent. For the third estimate of the second quarter, private inventory investment increased more than previously estimated, but the general picture of economic growth remains the same. In the first quarter of 2017, real GDP increased 1.2 percent. Some economists expect growth to slow in the third quarter due to the series of devastating hurricanes that impacted the U.S.