Window on Washington - This Week in the Nation's Capital - May 26, 2017 Vol. 1, Issue 10
- The President’s FY 2018 Budget Proposal: The President’s FY 2018 Budget Proposal: The President released the full version of his first budget, laying out his proposals for Fiscal Year (FY) 2018 and the following decade. The budget proposes significant spending cuts over the next decade, along with extremely optimistic economic growth assumptions, in order to show debt on a downward path. Highlights include $668 billion in defense spending, coming in $22 billion above current levels, and $479 billion for non-defense programs, which amounts to $57 billion less than current spending. The White House has proposed slashing funding for all federal departments besides DoD, Veterans Affairs and Homeland Security, which has received early opposition from both Democrats and Republicans (Center for a Responsible Federal Budget).
The budget proposes about $3.6 trillion of deficit reduction, including $1.5 trillion from largely unspecified discretionary cuts, $2.8 trillion in net mandatory cuts, $1 trillion less in revenue – mainly from repealing and replacing the Affordable Care Act (ACA) – and $300 billion in interest savings (Center for a Responsible Federal Budget).
According to the Office of Management and Budget (OMB), the budget would reduce debt from 77 percent of Gross Domestic Product ($14.8 trillion) today to 60 percent of GDP ($18.6 trillion) by 2027 (Center for a Responsible Federal Budget).
OMB also estimates the budget will balance by 2027, down from a deficit of 3.1 percent of GDP ($603 billion) in 2017 (Center for a Responsible Federal Budget).
To achieve balance, the budget projects spending will shrink from 21.2 percent of GDP ($4.1 trillion) today to 18.4 percent of GDP ($5.7 trillion) by 2027 and revenue will grow from 18.1 percent of GDP ($3.5 trillion) today to 18.4 percent ($5.7 trillion) of GDP by 2027 (Center for a Responsible Federal Budget).
The estimates in the President’s budget are based on overly optimistic economic projections, which we recently estimated are responsible for $2.7 trillion of debt reduction. Using the Congresional Budget Office's (CBO) growth numbers, we found debt under the budget would likey remain stable, and deficits would remain above 2 percent of GDP (Center for a Responsible Federal Budget).
The budget also relies on a number of unrealistic policy assumptions by assuming deep unspecified non-defense discretionary spending cuts and omitting any details on the President’s potentially costly tax plan (Center for a Responsible Federal Budget).
- GOP Chairwoman on Trump Budget: Keeping His Promises of Growing the Economy and Shrinking Government: According to Republican Party Chairwoman Ronna Romney McDaniel, “President Trump is delivering on his promise to the American people by proposing a budget that will pay down our national debt and reinvigorate our economy over the next decade. This budget reins in spending without any cuts in benefits to Social Security or Medicare for our seniors—a pledge the president made during his campaign and intends to keep” (Fox News).
- Trump Proposes Selling Half the U.S. Strategic Oil Reserve: President Donald Trump is considering selling half the U.S. Strategic Petroleum Reserve to help tackle the country’s ballooning deficit, leaving some to question whether the reserve is even still useful (Foreign Policy).
- Air-Traffic Spinoff Would Boost U.S. Budget Deficits: One of the central elements of President Donald Trump’s infrastructure plan, a proposal to spin off the U.S. air-traffic system into a nonprofit corporation, would increase federal deficits (Bloomberg).
- The Trump Budget Kills OPIC but Maintains Ex-Im: Trump’s first budget eliminates the Overseas Private Investment Corporation, but keeps the Export-Import Bank. The justification is that “Development Finance Institutions (DFIs) like OPIC can at times displace the private sector, particularly in emerging and developing markets that have active international finance firms or domestic financial institutions capable of providing similar financing. While the Administration wants U.S. businesses to invest in emerging markets to grow their businesses and create American jobs, private sector financing is often available” (National Review).
- FY2018 Omnibus: House Republicans are considering crafting a catchall spending package for the upcoming fiscal year before the August recess. Rep. Tom Graves of Georgia, chairman of the Financial Services Appropriations Subcommittee, floated the idea of bundling all 12 regular spending bills that fund the government each year into a single package because of the late start this year in getting a budget from the new president (Congressional Quarterly).
- House Republicans Drop Debit Rule Repeal: House Republican leaders will drop language from a sweeping bank deregulation bill that would have eliminated a cap on debit card swipe fees, handing a major victory to retail lobbyists who spent months trying to kill the provision (Politico).
- U.S. Lawmaker Unveils Sweeping Pentagon Acquisition Reform Bill: The head of the U.S. House Armed Services Committee introduced legislation to cut cost overruns at the Pentagon by overhauling the way it buys everything from common off-the-shelf goods to services and intellectual property (Reuters).
- Bundle Clean Energy, Nuclear Tax Credit Proposals: A diverse set of lawmakers are aiming to revive expired clean energy tax credits alongside an early extension of a nuclear production credit. That strategy aims to broaden support for the credits in the hopes of increasing the chances of passage in the near future (Bloomberg).
- 22 GOP Senators Want US to Pull out of Paris Climate Accord: Senate Majority Leader Mitch McConnell and 21 other Republicans on Thursday urged President Donald Trump to follow through on his campaign pledge to pull out of the Paris climate accord (Fox News).
- Energy Bill: Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska) said she hopes to revive last year's wide-ranging energy bill (Washington Examiner).
Gross Domestic Product
- Second Reading of US Q1 GDP up 1.2% vs. 0.9% Growth Estimate: U.S. economic growth slowed less sharply in the first quarter than initially thought, but the weakness was likely an aberration amid a strong labor market that is near full employment (CNBC).
- Key Takeaways From CBO Score of the Republican Health Care Bill: As for premiums, the CBO finds the effects the same as previously estimated for roughly half the population, or for the people residing in states that did not pursue any waiver. However, for the other half of the population, the CBO attempts to estimate the effects of different combinations of waiver decisions. They estimate that one-third of the population would be in states that make some changes to market regulations. For these states, the CBO finds premiums to be 20 percent lower than under current law by 2026 (Heritage Foundation).
- White House Seeks 90-day Delay in Obamacare Subsidy Suit: The Trump administration and House of Representatives asked a federal court for another 90-day delay in a lawsuit over Obamacare insurance subsidies (Politico).
- New GOP Health Care Law Would Leave 23 Million Uninsured: The Republican-backed health care plan that passed the House earlier this month would leave 23 million more Americans without health insurance over the next decade than the current law and would only reduce the deficit by $119 billion, according to an analysis released from the Congressional Budget Office (NBC News).
- Appeals Court Upholds Block on Travel Ban: A federal appeals court upheld a ruling blocking President Donald Trump's travel ban against six Muslim-majority countries. The 10-3 ruling from the 4th US Circuit Court of Appeals upholds a lower court's decision to halt core portions of the executive order indefinitely (CNN).
- Trump’s Infrastructure Budget Ripped by Democrats: President Trump’s plan to rebuild America’s roads, bridges, seaports and airports was supposed to be one of the few areas ripe for bipartisan cooperation, but it got raspberries from Capitol Hill Democrats when presented as a $200 billion budget priority (Washington Times).
- Supreme Court Rejects 2 Congressional Districts In North Carolina: The Supreme Court has upheld a lower court ruling that struck down two North Carolina congressional districts, saying the state relied too heavily on race in drawing them (NPR).
- The Supreme Court’s Big Ruling on ‘Patent Trolls’ Will Rock Businesses Everywhere: Tech companies and app developers everywhere are breathing a sigh of relief after a major Supreme Court ruling on a topic that is close to their hearts: patents. More specifically, patent lawsuits — a rising number of which analysts say are bogus and threaten to strangle new start-ups and inventions before they have a chance to succeed. The ruling could wind up having a significant effect on which companies and innovations thrive and which get sued into oblivion (Washington Post).
- Supreme Court Affirms Ban on ‘Soft Money’ in Campaigns: The Supreme Court upheld the so-called soft money ban on state and local parties, prompting opponents of the restriction to turn their pleas for repeal to Congress (Roll Call).
- Border Adjustment Tax Proponents Struggle to Prevent More Republican Defections: House Ways and Means Chairman Kevin Brady mounted a renewed defense for including a border adjustment tax in the Republicans’ proposed tax overhaul, but he is facing increasing defections from members of his party who say the tax is complicated and will end up socking consumers (Washington Times).
- Victory for Trump As the G20 Drops its Pledge to Fight Against Economic Protectionism: The world's top economic powers dropped a long-standing endorsement of open trade amid pushback from the Trump administration (Daily Mail).
- MacArthur Resigns as Co-Chairman of Tuesday Group: Rep. Tom MacArthur resigned as co-chairman of the caucus of GOP moderates known as the Tuesday Group in the wake of deep divisions among its members over the House Obamacare replacement bill he helped craft (Politico).
Department of Agriculture
- Budget Proposal Guts Farm Subsidies, Republicans Not Happy: Republicans are already fighting back against President Donald Trump’s budget proposal for 2018, which calls for reduced spending on agriculture subsidies. The budget would curb payments like crop insurance, conservation assistance and rural development programs (Daily Caller).
Department of Education
- Texas Set to Pass Transgender Bathroom Law for Schools: A transgender "bathroom bill" reminiscent of the one in North Carolina that caused a national uproar now appears to be on a fast-track to becoming law in Texas, though it may only apply to public schools (ABC News).
- Top Education Dept. Official Resigns After Clash with DeVos: The head of the Education Department’s student financial aid office resigned over what he claims were simmering management problems at the agency that culminated in a dispute with Education Secretary Betsy DeVos over her insistence he testify before a congressional oversight panel (Politico).
- EPA, Energy Among Few Agencies Complying With Regulatory Order: The environmental and energy agencies appear to be far ahead of other federal agencies in complying with executive orders signed months ago by President Donald Trump, aimed at repealing or streamlining regulations (Bloomberg).
Department of Housing and Urban Development
- Ben Carson Calls Poverty ‘A State of Mind’: Housing and Urban Development Secretary Ben Carson said that a "certain mindset" contributes to people living in poverty, pointing to habits and a "state of mind" that children take from their parents at a young age (Washington Post).
Department of Justice
- Diesel Emissions: The U.S. government filed a lawsuit accusing Fiat Chrysler of illegally using software to cheat emission tests in diesel vehicles (Detroit Free Press).
- Lawsuit Accuses GM of Using Emission Defeat Devices: A class-action lawsuit filed today in federal court accuses General Motors of using defeat devices in two models of heavy-duty diesel trucks to beat emission tests, echoing similar claims against Volkswagen and Fiat Chrysler Automobiles (Detroit Free Press).
Department of Labor
- DOL Fiduciary Rule: Secretary of Labor Alexander Acosta said that the fiduciary rule—the landmark Obama-era investor protection rule--will go into partial effect on June 9, with full implementation on Jan. 1, 2018. However, the Department of Labor says it will not enforce any parts of the rule until Jan. 1 when the rule is in its entirety, including required disclosures and contracts that give rise to private lawsuits (Forbes).
Department of Treasury/OMB
- Mulvaney: Debt Ceiling Deadline Could Come Sooner Than Expected: Office of Management and Budget Director Mick Mulvaney warned that Congress may have to raise the debt ceiling sooner than previously expected. “My understanding that the [tax] receipts, currently, are coming in slower than expected and you may soon hear from [Treasury Secretary Steven] Mnuchin about a change in the date,” Mulvaney told the House Budget Committee. “We look forward to working with the Hill on the best way to go about this” (Politico).
- CFPB in Danger: The Consumer Financial Protection Bureau, a government organization that acts as a consumer watchdog, was on the chopping block Wednesday. The U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments about the future of the CFPB in a case a mortgage company called PHH Corporation brought against the government agency. The CFPB fined PHH $109 million in 2015, alleging the company violated the Real Estate Settlement Procedures Act when it accepted payment “kickbacks” for loans. PHH disputed the CPFB Director’s increase in penalties over what was recommended by staff and challenged the structure of the CFPB as unconstitutional (Market Watch).
- Trump Asked Intelligence Chiefs to Push Back Against FBI Collusion Probe After Comey Revealed its Existence: President Trump asked two of the nation’s top intelligence officials in March to help him push back against an FBI investigation into possible coordination between his campaign and the Russian government, according to current and former officials (Washington Post).
- Jared Kushner Now Under FBI Scrutiny in Russia Probe: Jared Kushner, the president's son-in-law and one of his senior advisers, has come under FBI scrutiny in the Russia investigation (CNBC).
- Mueller Briefed on Secret Comey Memos: Robert Mueller -- the former FBI director now overseeing the Department of Justice's investigation into Russia's election-year meddling and contact with the Trump campaign -- has been briefed on the contents of some of the memos that former FBI Director James Comey kept to document his conversations with President Donald Trump (CNN).
- White House Proposes $19.1 Billion NASA Budget, Cuts Earth Science and Education: The White House’s fiscal year 2018 budget proposal seeks to cancel five NASA Earth science projects and confirms plans to shut down the agency’s education office as part of more than $560 million in cuts from 2017. The proposal, released May 23, offers $19.092 billion for NASA, $561 million less than what the agency received in a fiscal year 2017 omnibus spending bill enacted earlier this month (Space News).
- DARPA Selects Boeing for Spaceplane Project: The Defense Advanced Research Projects Agency announced May 24th that it has picked Boeing to develop an experimental reusable first stage with the promise of lowering launch costs for medium-sized payloads (Space News).
- Rocket Lab Waits Out Weather Delays: As weather continues to delay the first launch of its Electron rocket, Rocket Lab’s chief executive said the company remains patient until conditions are right to attempt a flight (Space News).
- Delta 4 Replacement Ready by 2023, Top General Says: The U.S. Air Force expects a replacement for the Delta 4 Heavy rocket will be ready by 2023, with one of several vehicles under development able to take its place, Gen. Jay Raymond, head of Air Force Space Command, told a House committee May 19 (Space News).
- Rocket Lab Reaches Space, But Not Orbit, On First Electron Launch: Rocket Lab, a U.S.-New Zealand company developing the Electron small launch vehicle, declared success on its first launch May 25, although the rocket failed to reach orbit (Space News).
- Loser of ULA’s Vulcan Engine Downselect Will Likely Lose Funding: Whichever engine is not selected by United Launch Alliance to power the Vulcan rocket could lose its Air Force funding, although top acquisition officials declined to say Wednesday whether they would definitely take that action (Space News).
- U.S. Air Force Seeks $1.3 Billion Increase for Space Programs: The White House is asking Congress to provide $7.75 billion for military space systems in 2018, a $1.3 billion increase over what the Pentagon sought for 2017 (Space News).
- President and Pope: Why Trump's Foreign Trip is Surprising his Critics: President Trump’s meeting with Pope Francis seemed to capture not just the success he’s having on this foreign trip, but the progress he’s made since he and the pontiff were at odds during the campaign (Fox News).
- Climate Change: Pope Francis gave President Donald Trump a copy of his 2015 encyclical that calls for action on climate change during a meeting at the Vatican (Bloomberg News).
- Russian Officials Bragged They Could Use Flynn to Influence Trump: Russian officials bragged in conversations during the presidential campaign that they had cultivated a strong relationship with former Trump adviser retired Gen. Michael Flynn and believed they could use him to influence Donald Trump and his team (CNN).
- Why Trump’s Trip to Israel Was so Crucial to his Evangelical Base: Many saw the trip as repairing a relationship — which they consider damaged by President Barack Obama — between the United States and an important ally in the Middle East. Many Evangelicals point to Israeli affairs as their most important foreign policy concern since it has important religious symbolism for Christians and Jews (Washington Post).
- Manchester Attack: Trump Orders Probe After British Leaks: President Trump on Thursday called for an investigation into how key information that the British shared with allies about the Manchester attack leaked to reporters (Fox News).
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