Window On Washington - April 9, 2018, Vol. 2, Issue 14
Outlook for This Week in the Nation's Capital
Congress Returns Today. Congress comes back to Washington today after a two-week recess period for the Easter and Passover holidays and is scheduled to have a busy week. The House is planning to vote on a balanced budget amendment to the Constitution which requires two thirds of the House to vote in favor in order to advance to the Senate. A similar measure failed in 2011 and is being considered again this week in order to address the concerns being raised by some conservatives over the growing deficit. The House is also looking to continue the momentum of tax reform with the House Ways and Means Committee working on an IRS restructuring bill that focuses on customer service. The Ways and Means Committee is also in the process of creating a package of technical corrections that are needed in response to the tax bill passed last year.
The Senate is planning to focus on the opioid epidemic in the coming weeks and its health committee is planning on hold a hearing this week on its recently released opioid bill. Senator Alexander, the committee’s chairman, said that he would like to vote the bill out of committee before the summer. The House is also working on multiple bills related to the opioid epidemic and could vote on them on the floor before Memorial Day. Also happening this week is Facebook CEO Mark Zuckerberg’s testimony before both House and Senate committees. It is possible that some regulation of Facebook could occur as an outcome of these hearings and Zuckerberg announced last week that he would support legislation requiring disclosure of who’s paying for political ads on social media. Congress will have a busy spring and early summer before work largely grinds to a halt before the November elections. National Journal has compiled a legislative outlook which is available here.
Last Week in the Nation's Capital
Shelby to Gain Senate Appropriations Chairmanship as Committee Begins Its Budget Work: Senator Shelby (AL) is expected to be elected chairman of the Senate Appropriations Committee by his Republican colleagues as early as this evening after lawmakers return from the recess. As soon as tomorrow, the Senate Republican Conference will begin approving a new lineup of subcommittee chairmen and rosters as spaces are being freed up with the promotion of Shelby after the retirement of Chairman Cochran. The changes are likely to be in place before the Committee begins a number of budget hearings later this week with testimony from the Departments of Energy, Transportation, Labor and Agriculture. The full schedule is available here. (Clark Hill Insight)
House Appropriations Committee to Hold 20 Budget Hearings: The House Appropriations Committee is coming back to a full schedule after the recess. Between Wednesday and Friday, the Committee has scheduled 20 budget oversight hearings for federal departments and agencies including NIH, NOAA, DHS, Interior, NASA, Transportation and others. The full schedule is available here. (House Appropriations Website)
Senate GOP Skeptical of Trump Idea to Cancel Spending: Senate Republicans are reacting tepidly to proposals from President Trump and House Majority Leader Kevin McCarthy that Congress use an arcane budget maneuver to claw back spending from the $1.3 trillion omnibus package passed just last month with bipartisan support. They say they won’t take the rescission proposal seriously until House Speaker Paul Ryan takes a position on it and to date, Ryan has yet to speak publicly about the proposal with Republican aides saying he appears to be skeptical. (The Hill)
Conservatives Fear Trade War Could Cripple Tax Cuts Message: The tax law has been at the center of the GOP’s midterm messaging, with Trump and Republican lawmakers touting its boost to paychecks and the economy. But conservatives warn that message could be undercut if Trump’s actions on trade counteract the tax cuts’ benefits. Stocks have already fallen, with traders pointing their fingers to the tariffs as an explanation. (The Hill)
House Armed Services Chairman Doesn’t Want to Use Defense Funding to Build Border Wall: Military funds should not pay for a border wall, especially given the readiness challenges and modernization needs that U.S. warplanes, ships and ground forces have after years of reduced funding, the Republican chairman of the House Armed Services Committee, Rep. Thornberry, said last week. (DefenseNews)
Trump's Infrastructure Czar Steps Down: DJ Gribbin, President Trump's point person on a much-heralded infrastructure bill, is leaving his position at the White House to "move on to new opportunities," according to a White House official. Gribbin's departure comes just days after President Trump conceded that his infrastructure proposal — often described as a top administration priority — is likely to remain stalled through at least the end of the year. "We probably have to wait until after the election because the Democrats say, 'don't give him any more wins,'" Trump said at an event on Thursday in Richfield, Ohio. (Market Place)
Labor and Workforce
Maine Governor Wants More Federal Funds on Job Training: Governor Paul LePage wants more federal funds used to help unemployed Mainers shifted to job training, a move some local labor officials say would take money from individualized career counseling, hurting vulnerable job seekers. LePage's administration last week submitted his plan that demands that locally run workforce boards spend 70 percent of federal workforce funds on job training, Maine Department of Labor spokeswoman Laura Hudson said Monday. The U.S. Department of Labor has 90 days to review the governor's proposal, which concerns about $8 million in federal Workforce Innovation and Opportunity Act funding. (Chicago Tribune)
Senate Releases Draft of Bipartisan Opioid Response Bill: Senate Health Committee leaders released a bipartisan discussion draft of a bill aimed at combating the opioid epidemic, legislation that's the result of six hearings over the past six months. The panel will hold a hearing next week on the draft. It includes measures attempting to make it easier to prescribe smaller packs of opioids for limited durations, spur the development of nonaddictive painkillers and bolster the detection of illegal drugs at the border. (The Hill)
Trump’s Chaotic Cabinet Shuffle Tries GOP Patience: President Donald Trump may be relishing the chance to shake up his administration. But the Senate is threatening to upend his plans. After using Twitter to abruptly oust his secretaries of state and veterans affairs and promote his CIA chief, the president is counting on the Senate GOP’s slim majority to confirm three new Cabinet members in the coming months — and potentially more, should his EPA administrator succumb to a torrent of withering headlines. Republicans aren’t pleased. (Politico)
NIH Announces New Opioid Initiative: NIH announced the launch of the HEAL (Helping to End Addiction Long-term) Initiative, a trans-agency effort to speed scientific solutions to stem the national opioid public health crisis. Toward this effort, NIH is nearly doubling funding for research on opioid misuse/addiction and pain from approximately $600 million in fiscal year 2016 to $1.1 billion in fiscal year 2018, made possible from a funding boost by Congress. HEAL will build on NIH research, including basic science of the complex neurological pathways involved in pain and addiction, implementation science to develop and test treatment models, and research to integrate behavioral interventions with Medication-Assisted Treatment for opioid use disorder. (NIH News Release)
CMS Tweaks Opioid Proposal After Feedback: CMS has released a sweeping final Medicare rule that included altering a draft proposal aimed at curbing the opioid epidemic that had proven controversial. The agency had received pushback from doctors and patients on a proposal that would have meant a prescription for high doses of opioids (90 milligrams of morphine per day or more) automatically wouldn’t be filled and the patient would need special permission from their private insurance company in order to receive the medication. CMS revised the policy to be that when a pharmacist receives a prescription for a dosage of 90 milligrams of morphine or more per day, they will be required to talk to the prescriber, document the discussion and if the prescriber approves, then they can fill the prescription. (The Hill)
DOJ Establishes Quotas for Immigration Judges: The Department of Justice has announced it will evaluate immigration judges on how many cases they close and how fast they hear cases. This policy is being criticized by judges and advocates because it could potentially jeopardize the courts' fairness and perhaps lead to far more deportations. (CNN)
Justice Department Seeks Role in Opioid Settlement Talks: The U.S. Justice Department has sought court permission to participate in settlement negotiations aimed at resolving lawsuits by state and local governments against opioid manufacturers and distributors. The Justice Department said in a brief it wanted to participate in talks overseen by a federal judge in Cleveland as a “friend of the court” that would provide information to help craft non-monetary remedies to combat the opioid crisis. (Reuters)
Trump to Examine Power Company's Plea for Energy Department Aid: President Trump appeared to signal last week that he'll soon examine a plea by the financially struggling power company, FirstEnergy Solutions Corp., for the Energy Department to support the operation of its coal-fired and nuclear plants. FirstEnergy wants DOE to alter market conditions in the PJM Interconnection region, which covers all or parts of 13 states — including Ohio, Pennsylvania, and West Virginia — and contains a substantial number of coal and nuclear plants operated by multiple companies. (Axios)
EPA Sued by 14 States Over Delay in Methane Emission Standards: The legal challenge, led by New York state, came nine months after a federal appeals court sided with environmental activists who sued to block the EPA from freezing enforcement of its own rules to control methane leaks from new or modified fossil fuel facilities. In both instances, EPA chief Scott Pruitt has been accused of putting the interests of oil and gas companies ahead of the agency’s obligation to protect air quality, including the control of heat-trapping pollutants that scientists blame for global climate change. (Reuters)
The H-1B CAP Has Been Reached: On April 6, 2018, U.S. Citizenship and Immigration Services ("USCIS") announced that between April 2, 2018 and April 6, 2018, USCIS received more than enough applications for new H-1B visas for the 2019 government fiscal year. Applications exceeded the quota, for both the regular 65,000 limit (also called a "cap") and the additional 20,000 limit for persons who have an advanced degree (more than a bachelor degree) from a U.S. university. Because more applications than the quota permits were received for both Bachelor's and Master's cap cases in the first five business days of April, USCIS will use a lottery system to randomly select the number of petitions required to reach the numerical limit. (Clark Hill Insight)
Pentagon Names Dana Deasy to Lead Defense IT: The Pentagon announced that JP Morgan Chase’s former chief information officer Dana Deasy will become the Department of Defense’s top IT official in early May. (DefenseNews)
Banking & Housing
Bank Regulatory Actions Under Trump Fall to Historic Lows: The issuance of financial regulations has dropped to a 40-year low, new data shows, a sign that the Trump administration is fulfilling its deregulatory agenda. Companies that track financial regulations started to see a slight drop in the volume of regulations last year with a major drop-off in issuances and revisions in the first quarter. The sharp reduction in regulatory activity comes as Congress is also aiming to ease the industry’s load. A bipartisan regulatory relief package that recently passed the Senate, which makes targeted reforms to the Dodd-Frank Act, is now pending before the House, and has Trump’s support. (American Banker)
Billions of Dollars to Help California’s Homeless Population are Piling Up — and Going Unspent: California's homeless population has grown to more than 134,000 people, and key state government spending is taking a while to reach the streets. In summer 2016 the state approved its largest homeless program, a $2-billion loan to help finance new housing, but the money is tied up in court. That same year, lawmakers allocated $35 million for rental assistance and emergency shelters, but staff shortages at the housing department delayed spending the money for 18 months. Last year's package of housing legislation included more than $100 million for programs to help the homeless, but the state won't begin spending those dollars until fall at the earliest. The spending difficulties come as the state's homeless population has risen 16% over the past two years. (Los Angeles Times)
Arizona Jumps Ahead of Other States In Financial Innovation: The dual banking system in the United States has been criticized because it is cumbersome and often results in more than one financial regulator having oversight over a bank or thrift. The virtue of the dual banking system, however, is that it has fostered a healthy competition between federal and state regulators that has resulted in innovation in products and services to the benefit of businesses and consumers. While the Comptroller of the Currency is developing its special purpose national bank charter and several states have agreed to a common application for approval for a money services business, Arizona is the first state that has created a statutory framework to develop a Regulatory Sandbox Program (“Sandbox” or “Program”) to temporarily test innovative financial products or services on a limited basis without otherwise being licensed or authorized to act under its existing laws. (Clark Hill Insight)
Space & NASA
Space War is Coming — and the U.S. is Not Ready: War is coming to outer space, and the Pentagon warns it is not yet ready, following years of underinvesting while the military focused on a host of threats on Earth. Russia and China are years ahead of the United States in developing the means to destroy or disable satellites that the U.S. military depends on for everything from gathering intelligence to guiding precision bombs, missiles and drones. Now the Pentagon is trying to catch up — pouring billions more dollars into hardening its defenses against anti-satellite weapons, training troops to operate in the event their space lifeline is cut, and honing ways to retaliate against a new form of combat that experts warn could affect millions of people, cause untold collateral damage and spread to battlefields on Earth. (Politico)
NOAA Speeds up Remote Sensing License Reviews Amid Broader Regulatory Changes: The small office that currently handles licensing of commercial remote sensing systems says it’s made major progress in processing license applications, even as the government moves ahead with broader reforms. At an April 3 meeting of the Advisory Committee on Commercial Remote Sensing here, officials with the Commercial Remote Sensing Regulatory Affairs (CRSRA) office, part of the National Oceanic and Atmospheric Administration, said they have significantly decreased the average review time for license applications for commercial Earth imaging systems. Congress has also been looking into legislative reform of the commercial remote sensing licensing process. (Space News)
Amid Mounting GOP Criticism, White House Shrugs Off Tariff Worries: Amid mounting criticism from Republicans and usually GOP allies, White House chief economic adviser Lawrence Kudlow and other White House officials on Friday pushed back on the idea that President Donald Trump is starting a trade war with China. The Trump Administration might present the Chinese government with a list of trade tactics changes it would like to see implemented as a result of the ongoing tariff proposal tit-for-tat, Kudlow told a group of reporters. “That is something that is under consideration,” he told reporters. (Roll Call)
USTR's Section 301 Tariff List Targets Multiple Chinese Industries: On April 4, 2018, the Office of the U.S. Trade Representative (USTR) proposed 25% tariffs on a multitude of imported goods from China. The covered products span 1,300 separate tariff classification lines. The proposed tariffs are in addition to any import duties and fees already in place. This means that a product on the 301 list, and also covered by the recent Section 232 global tariffs on steel and aluminum, could be subject to 50% or 35% duties, respectively. According to the USTR, the proposed list targets products that benefit from China’s allegedly unfair industrial plan while minimizing the impact on the U.S. economy. (Clark Hill Insight)
IRS Issues Guidance on the Business Interest Expense Limitation: Last week the Treasury and the IRS issued Notice 2018-28 which provides guidance concerning the business interest expense limitation enacted as part of tax reform. The guidance includes the application of the rules to consolidated groups of corporations and the carryover treatment of certain disallowed interest expense incurred prior to 2018. (Clark Hill Insight)
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