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Window on Washington - December 4, 2017 Vol. 1, Issue 37

Dec 03, 2017

Outlook for This Week in the Nation's Capital

Tax Negotiations Begin: House Majority Leader McCarthy informed members on Thursday that they should be ready to vote this evening on a motion to go to conference with the Senate on tax legislation, despite the House not scheduled to be in session. This will start a difficult conference process Congressional Republicans and the White House hope to have completed in time to pass the final legislation before Christmas.

Shutdown Watch—Four Days: House Republican Leadership is working on a strategy to pass a short-term continuing resolution before Friday to fund the government through December 22. However, House conservatives do not fully agree with the strategy, potentially opening the need for Republicans to work with Democrats to fund the government, which would likely require including a renewal for the DACA program. On Friday, OMB conducted a call releasing its standard guidance to departments for a government shutdown. Democrats and Republicans are already positioning themselves on who should take the blame if a shutdown occurs. President Trump said he would blame it on the Democrats and that a shutdown might help him.   

Flynn Plea Deal: Flynn’s guilty plea to one count of lying to the FBI was the major story discussed on Friday, and it is being reported that the White House did not know this would occur. How all of this could influence the state-of-play in DC over the coming weeks is unknown. 

Summary of the Week Ahead: Congress Faces Frantic Week with Possible Shutdown, Taxes, Russia. (Politico)

Last Week in the Nation's Capital

Congress

Tax Reform

Senate Tax Plan Won’t Cover Full Cost, According to New Joint Committee on Taxation Study: Senate Republicans’ tax-rewrite plan would fall well short of covering its $1.5 trillion cost through additional economic growth as many lawmakers have promised, a new official analysis shows. In an eagerly awaited report, the nonpartisan Joint Committee on Taxation said the plan would boost the economy, but not by nearly as much as Republicans predict. It sees the plan boosting growth by 0.8 percent over the next decade, which it said would throw off $407 billion in additional revenue. That would reduce the cost of the GOP plan to about $1 trillion. (Politico)

GOP to Reduce Tax Relief by $350B to Win over Deficit Hawks: Senate GOP leaders agreed to roll back $350 billion in tax relief in response to a procedural ambush by deficit hawks led by Sen. Bob Corker (R-TN) that nearly killed the GOP tax reform bill. Corker insisted on a trigger proposal that would roll back tax relief in case economic projections fell short of expectations, but the Senate parliamentarian ruled Thursday afternoon that the trigger would not pass procedural muster, hence the new approach. (The Hill)

House Conservatives Deal Blow to Rubio-Lee Child Tax Credit Proposal: Conservative House members dealt a blow Thursday to a proposed amendment to the Senate tax plan by Republican Sens. Marco Rubio of Florida and Utah’s Mike Lee that would trim the corporate tax cut to help lower-income working families. The plan, which was floated Wednesday, would make the child tax credit refundable against payroll taxes. To offset losses in tax revenue from the refunds, the proposal calls for an adjustment to the corporate tax rate from the proposed 20 percent to 22 percent. House conservatives said a 22 percent rate would not fly in the House. (Roll Call)

Budget

Congress Looking at Two-Step Continuing Resolution Process to Avoid Shutdown: It is being suggested that Congress could pass a continuing resolution-funding bill this week, which would last until December 22, as the current continuing resolution expires on Friday. This would give Republicans and Democrats time to negotiate a major spending-cap deal. Then, at the end of December, they’d pass another continuing resolution bill into January that could also include renewing a children’s healthcare program and boosting spending caps. The time would allow the Appropriations Committee to complete the FY18 bills at the new cap levels. However, some House conservatives opposed this plan, and if more than two dozen oppose the strategy, Republicans will need the help of Democrats to pass the spending measures. (The Hill)

Debt Ceiling

CBO Announces that Debt Ceiling Needs to Be Raised by Late March: The US Treasury would exhaust all its borrowing options and run dry of cash to pay its bills by late March or early April if Congress does not raise the debt ceiling before then, the nonpartisan Congressional Budget Office said on Thursday. (Reuters)

Health

Health Nominee Grilled on Commitment to Lower Drug Prices: Alex M. Azar II, President Trump’s nominee for Secretary of Health and Human Services, said he would try to reduce the burden of high drug costs, but he largely absolved drug companies from blame, placing the responsibility on a system that encourages price increases on medicines. (The New York Times)

Governors Implore Congress to Renew Children's Health Funding: The National Governors Association is urging Congress to fund critical healthcare programs—including the Children’s Health Insurance Program and community health centers—before the year ends. Lawmakers failed to reauthorize money for CHIP, health centers, and other health programs by September 30. The funding lapse frustrated officials and advocates, who say the uncertainty causes angst for those charged with running these programs. (The Hill)

Thirteen Million More People Would Be Uninsured Even if Senate Does Obamacare Two-Step, CBO Says: The Congressional Budget Office on Wednesday poured cold water on the idea that fallout from eliminating Obamacare's key rule could be reduced by passing another pending Senate bill. The CBO's director said it would still expect 13 million more people to not have health insurance by 2027 than are currently projected if Obamacare's individual mandate is repealed, even if the Alexander-Murray bill is passed into law. (CNBC)

Energy

Some House Republicans Object to Drilling Provision in Senate Tax Bill: A dozen House Republicans say they oppose the Senate’s proposal to allow oil and natural gas drilling in Alaska’s Arctic National Wildlife Refuge. The House tax bill did not contain a similar provision. (The Hill)

Education

GOP Begins Rewrite of Federal Aid Law: The Education Committee of the Republican-led US House of Representatives is set to release an opening salvo in Congress’ long-overdue reauthorization the Higher Education Act, the law that oversees federal financial aid programs. Although plenty of details have yet to emerge, the summaries describe an ambitious plan to substantially change how the federal government targets and distributes student aid money, with moves to both deregulate and tighten oversight of aspects of aid programs. (Inside Higher Ed

Executive Branch

CFPB

Federal Judge Refuses to Block Trump’s Designation of Mulvaney as Interim Head of CFPB: A federal judge on Tuesday rejected arguments by Leandra English, whom outgoing director Richard Cordray named deputy director of the Consumer Financial Protection Bureau, in a lawsuit she brought over the agency’s interim leadership. (Legal News Line)

Elizabeth Warren Is Opening a New Front in Her War with Trump over the Top Consumer Watchdog Agency: Democratic Sen. Elizabeth Warren is seeking an Inspector General investigation into Consumer Financial Protection Bureau Acting Director Mick Mulvaney's first moves at the agency’s helm. (Business Insider)

DOI

US Labor Department Delays Final Part of Fiduciary Rule: The US Department of Labor issued an 18-month delay on Monday for key parts of its retirement rule, including one that would require brokers to ask clients if they believe accounts that charge commissions are in their best interests. The Labor Department said the delay gives it time to review public comments received in recent months and to satisfy President Donald Trump’s request in February that it review the cost the rule poses to the wealth management industry and investors. (Reuters)

Trade

Aluminum Imports Again Targeted by a New Trade Case: Chinese aluminum exports are again the target of a new US trade action. On November 28, 2017, the Department of Commerce self-initiated antidumping and countervailing duty investigations against imports of alloy aluminum sheet from China. This marks the first time in more than two decades that the agency has brought its own case against foreign imports. (Clark Hill Insight)

HHS

CMS Trims List of Possible Medicare Quality Measures: The CMS on Thursday released a list of 32 reporting measures under consideration for Medicare's quality reporting and value-based purchasing programs. The number of measures under review is much smaller compared with last year when CMS considered nearly 100 measures. (Modern Healthcare)

Exclusive: US Health Regulator Verma Eyes New Methods for Drug Pricing: The US Government is considering setting new payment methods aimed at curbing costs for Medicare and Medicaid coverage of breakthrough medical treatments with very high prices, particularly novel gene-based therapies for cancer and other diseases, a top health official said on Thursday.

NIH Launches HIV Prevention Trial of Long-Acting Injectable Medication in Sexually Active Women: The first large-scale clinical trial of a long-acting injectable medication for HIV prevention in sexually active women has begun. The study in southern and eastern Africa will examine whether a long-acting form of the investigational anti-HIV drug cabotegravir injected once every eight weeks can safely protect women at risk for HIV infection. The US National Institutes of Health (NIH) is sponsoring the trial, and the NIH-funded HIV Prevention Trials Network (HPTN) is conducting the study, called HPTN 084. (NIH)

National Science Panel Calls for Aggressive Steps to Control Drug Prices: The US must take urgent steps to rein in the out-of-control cost of prescription drugs, including aggressive government intervention to negotiate lower prices for American patients, a panel of the National Academies of Sciences, Engineering, and Medicine recommended in a sweeping new report on pharmaceutical pricing. (Los Angeles Times)

Education

US Department of Education Announces Vision to Transform Federal Student Aid, Improve Customer Service: Dr. A. Wayne Johnson, chief operating officer of the Department's office of Federal Student Aid (FSA), announced the blueprint for FSA's Next Generation Financial Services Environment. This new approach modernizes the technology and operational components that support federal student aid programs from application through repayment. Students, parents, and borrowers will begin to see meaningful improvements in the customer experience in early 2018 with significant technology and operational infrastructure changes throughout 2019. (US Department of Education)

Trump Taps Mark Schneider to Lead Institute of Education Sciences: President Trump has nominated Mark Schneider to serve as the director of the Institute of Education Sciences, the U.S. Department of Education's research arm. If confirmed by the Senate, Schneider will serve for six years, potentially beyond Trump's tenure as president. (Education Week)

Nonprofit/IRS

Charitable Gifts Could Plummet Under Republican Tax Plans: Despite retaining a deduction for charitable donations, efforts in the House and Senate to revamp the U.S. tax code likely would lead to a reduction in giving to charities and other nonprofits because the bills reduce incentives for taxpayers to take advantage of the benefit. (Law 360)

EPA

US EPA Ups Biofuel Targets Slightly, Draws Scorn from Refiners: The US Environmental Protection Agency said on Thursday it would require fuel companies to blend slightly more biofuels into the nation’s gasoline and diesel next year, angering oil refiners who view them as a competitive threat. (Reuters)

Transportation

Bipartisan Lawmakers Ready Infrastructure Report amid Questions over White House Plan: The Congressional Problem Solvers Caucus is readying a bipartisan infrastructure report lawmakers hope will serve as a blueprint for President Trump’s rebuilding proposal, members of the moderate group said Thursday. The caucus held five meetings on infrastructure over the last two months, including one with the Administration, to gather input from stakeholders about the best—and most bipartisan—path forward on a rebuilding initiative. The latest meeting came Thursday with former Gov. Ed Rendell (D-Pa.) and former Transportation Secretary Ray LaHood, who co-chair Building America’s Future. (The Hill)

Banking/Housing

Affordable Housing Developers, Financiers Worried about Potential Effects of Tax Reform: As Congress works toward passing tax reform, many developers and financiers in the affordable housing industry are sounding alarm bells about the impact it could have on one of their key housing creation tools. (BisNow)

Fed Nominee Powell: Financial System “Quite Strong,” Backs “Tailoring” Regulations to Ease up on Small Banks: Speaking before the Senate Banking Committee during his confirmation hearing this week, Powell mentioned several areas he'd like to see addressed about rules banks operate under in the postfinancial crisis atmosphere. The hearing featured a number of exchanges in which Powell was pressed on his regulatory views, while other senators unsuccessfully sought to get him to comment on the looming tax reform bill in Congress. (CNBC)

CFTC

US Regulator to Allow CME, CBOE to List Bitcoin Futures: The US derivatives regulator said on Friday it would allow CME Group, Inc. (CME.O) and CBOE Global Markets, Inc. (CBOE.O) to list bitcoin futures, after the rival bourses showed their proposed contracts and trading arrangements met necessary requirements. The announcement by the Commodity Futures Trading Commission paves the way for CME and CBOE to become the first traditional US-regulated exchanges where bitcoin-related financial contracts can trade, a move that leads to increased regulatory scrutiny of the biggest and best-known digital currency. (Reuters)

NASA

NOAA Administrator Nominee Sees Satellite Programs as a Priority: The businessman nominated by the White House to be the next administrator of the National Oceanic and Atmospheric Administration said it will be a priority for him to maintain the agency’s network of weather satellites. In a confirmation hearing held by the Senate Commerce Committee, Barry Myers, the chief executive of weather forecasting company AccuWeather, also expressed interest in alternative commercial weather data sources of which NOAA is testing utility. (Space News)

Deep Space Gateway Key Part of Updated Exploration Roadmap:  A new edition of an international space exploration planning document to be released early next year offers an updated plan for human missions to the moon and Mars, emphasizing the role that NASA’s proposed Deep Space Gateway could play. In January, NASA and 14 international space agencies plan to publish their common goals for exploration, including an extended presence in low Earth orbit, a cislunar habitat, moon missions, and eventual excursions to Mars, in an updated Global Exploration Roadmap being drafted by the International Space Exploration Coordination Group. (Space News)

Audit Reveals NASA Spent $1.4 Billion on IT, but Governance and Security Issues Remain: NASA spent $1.4 billion, or 7.6 percent of its $18.5 billion budget, on information technology, but continues to struggle with security and governance, according to the space agency's annual report. The report highlights how NASA has struggled with managing its roughly 500 information systems for controlling spacecraft, collecting and processing data, and enabling basic enterprise functions such as collaboration. (ZD Net)

Russian Investigation

Michael Flynn Pleads Guilty to Lying to the FBI: Former National Security Adviser Michael Flynn pleaded guilty Friday to lying to the FBI about his contacts with Russian Ambassador Sergey Kislyak, and authorities indicated in court he acted under instructions from senior Trump transition officials in his dealings with the diplomat. Flynn’s admission to the charge Friday in federal district court in DC is an ominous sign for the White House, as court documents indicate Flynn is cooperating in the ongoing probe of possible coordination between the Trump campaign and the Kremlin to influence the 2016 election. (The Washington Post)

White House

Fifth Third's McWilliams Tapped as Next FDIC Chair: Jelena McWilliams, the chief legal officer for Fifth Third Bancorp. will be nominated as the next chair of the Federal Deposit Insurance Corp., the White House said late Thursday. (American Banker)

Conway to Lead White House Opioid Effort: Attorney General Jeff Sessions on Wednesday praised Kellyanne Conway’s efforts to help address the opioid epidemic for the White House. “She is exceedingly talented; she understands messaging,” Sessions said at an event announcing the Justice Department’s next steps on the opioid crisis. (The Hill)

Trump Moves to Fill Fed, Financial Regulatory Vacancies with Two Nominations: President Trump on Wednesday made nominations for two key economic policy positions, seeking to fill piling vacancies at the Federal Reserve and reshape the Financial Stability Oversight Council (FSOC). Trump nominated Carnegie Mellon University Economics Professor Marvin Goodfriend to the Federal Reserve Board and insurance attorney Thomas Workman to FSOC. The two would play critical roles in shaping economic and financial regulatory policy through independent agencies. (The Hill