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Window On Washington - February 11, 2019, Vol. 3, Issue 7

February 11, 2019

Outlook for This Week in the Nation's Capital

Congress:  Congressional negotiators spent all last week and weekend working on a border security deal in an effort to avoid another partial government shutdown, but as of Sunday, talks have stalled. Democrats and Republicans have clashed over immigrant detention policy, as Democrats desire to cap the number of beds in ICE detention centers, while Republicans want to increase the amount. Lawmakers hoped to have an agreement today in order to allow time for legislation to pass both houses and land on the President’s desk by Friday in order to avoid another partial government shutdown. In other news, the Senate Judiciary Committee last week approved the nomination of Bill Barr to serve as the next Attorney General, a vote in the full Senate to confirm him is expected later this week, while the House continues to plan numerous oversight hearings for various administration officials in the coming weeks. On Tuesday, however, the House will take no votes so many Members of the Congress can attend the funeral of Rep. Dingell (D-MI), the longest serving member in the history of the U.S. House, who died last Thursday at the age of 92.  The Detroit Free Press front page from that day characterized and celebrated Mr. Dingell simply as “Man of the House.” 

White House:  The President in his SOTU speech last week suggested that government would not properly function if Congress chose “investigation over legislation”, and on Friday tensions were already high on the Hill and at the White House as acting Attorney General Matthew Whitaker testified in a raucous hearing before the House Judiciary Committee, under the threat of subpoena by Chairman Jerry Nadler (D-NY).  The White House last Thursday fired off letters demanding no threat of subpoena for any such witness who would be asked questions about providing advice to the President – these letters were seen as early indicators that the President’s legal team will take an aggressive approach to stall the disclosure of conversations between Trump and his advisers to House investigators.  The President has still not indicated whether or not he will sign the deal the Congress is finalizing, although sources close to the President have said he realizes that he will have to accept a deal short of his $5 billion goal.

Budget & Appropriations:  The Trump Administration confirmed that the delivery of its FY20 budget request to the Congress will be delayed well into March – the “overview” of the budget is now expected on March 11, and the detailed agency by agency justifications the following week, further complicating the fiscal year 2020 budget and appropriations processes on Capitol Hill.  There are reports that some members of the Appropriation Conference Committee are also hoping the FY19 final deal can include a deal to raise the budget caps on defense and domestic discretionary spending that will come into effect this October (FY20), but no word yet on whether it will be included or the White House position.  In other chatter, talks continue behind closed doors about the possibility of restoring earmarks for the FY20 appropriations process, but talks are actively ongoing and are more serious than they have been since 2010.  Hill watchers believe a decision should be made soon either way, as the Appropriations Committees would need time to develop new guidance and timeline for Members.

Last Week in the Nation's Capital


Tax Reform

Grassley Says Senate Won’t Revisit Provision of GOP Tax Law: Sen. Chuck Grassley (R-IA) is throwing cold water on the idea of revising a key provision in the GOP tax law after President Trump said he was open to revisiting it. A spokesman for Grassley said in a statement that the Senate Finance Committee chairman won't revisit the tax law's cap on the state and local tax (SALT) deduction. (The Hill)


Does The NIH Deserve A Piece Of Biopharma's Profits?: It’s no surprise that the 116th Congress has opened with hearings on drug pricing – a bipartisan issue. It is also no surprise that as the newer members of Congress are digging into this, old issues are again resurfacing and new outrage is being expressed with the role of the NIH in drug discovery touching a big nerve. An exchange at a hearing last week between Rep. Alexandra Ocasio-Cortez and Professor Aaron Kesselheim of Harvard has generated special attention when he agreed with her contention that while public is acting as an “early investor, putting tons of money in the development of drugs that then become privatized” they then receive little no return on the investment due to lack of stronger licensing deals. (Forbes)

Democrats Kick off Push for Medicare Drug Price Negotiations:  The leader of the Ways and Means Health Subcommittee last week offered a proposal to require the Department of Health and Human Services to negotiate prices for drugs covered by the Medicare prescription drug benefit.  Rep. Lloyd Doggett (D-TX) formally introduced the bill with more than 100 House co-sponsors. A companion bill was introduced in the Senate backed by Sens. Sherrod Brown (D-OH); Amy Klobuchar (D-MN) and Tammy Baldwin (D-WI). House Democrats are expected to debate the legislation to allow Medicare to negotiate drug prices, although Senate Republicans are unlikely to take up such a plan. The measure includes tactics to urge drugmakers to reach an agreement with Medicare on a price. (Roll Call)


Lawmakers: Air Force Launch Procurement Strategy Undermines SpaceX:  Sen. Dianne Feinstein (D-CA) and Rep. Ken Calvert (R-CA) are calling for an independent review of the Air Force’s space launch procurement strategy. They contend that the Air Force, in an effort to broaden the launch playing field, is putting SpaceX at a competitive disadvantage.  At issue are Launch Service Agreement contracts the Air Force awarded in October to Blue Origin, Northrop Grumman Innovation Systems and United Launch Alliance. (Space News)


6 Takeaways from Acting Attorney General Matthew Whitaker’s Hearing: Acting Attorney General Matthew Whitaker’s much-anticipated hearing before the House Judiciary Committee was a messy affair, filled with some fiery exchanges, partisan bickering, and few revelations about Whitaker’s role overseeing special counsel Robert Mueller’s investigation or the rest of the Justice Department. Whitaker had threatened not to show up for the prescheduled hearing after the Democrats on the committee authorized a subpoena, leading to a day of back-and-forth with House Democrats that ultimately foreshadowed the tense testimony. (Vox)

U.S. House Judiciary Panel Passes Bill to Make Oil Cartels Illegal: The U.S. House of Representatives’ Judiciary Committee approved a fresh bill by voice vote on Feb. 7 to amend the Sherman Antitrust Act to make oil producing and exporting cartels illegal. H.R. 948, which committee member Steve Chabot (R-OH) introduced on Feb. 4, reportedly gained traction following reports that the Organization of Petroleum Exporting Countries was considering formalizing its relationship with Russia and other non-OPEC producers and might discuss the matter when it meets with those countries’ representatives in Vienna on Apr. 18. (Oil & Gas Journal)


Senators Demand Answers From Facebook on Paying Teens for Data: Sens. Richard Blumenthal (D-CT), Ed Markey (D-MA) and Josh Hawley (R-MO) sent a letter to Facebook CEO Mark Zuckerberg expressing concern about privacy implications of the program, known as Project Atlas, which paid teenagers and young adults for access to their mobile phone and browsing data. (The Hill)


Rep. Alexandria Ocasio-Cortez Releases Green New Deal Outline: Last week, Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) introduced a framework they call a “Green New Deal”. The resolution sets out aggressive goals to achieve net-zero greenhouse-gas emissions in a decade, as well as a broad set of other transformative economic changes.  (NPR)

Public Lands Bill with LWCF Reauthorization Clears Senate Hurdle: A broad public lands package S. 47 (116) that includes a permanent reauthorization of the Land and Water Conservation Fund easily cleared a key Senate procedural hurdle last week. The bill is expected to clear the Senate in the next few days. (Clark Hill Insight)

Banking/Housing Finance

On Thursday, the Senate Banking Committee holds a confirmation for Mark Calabria to be the next Director of the Federal Housing Finance Agency (FHFA).  Calabria, currently chief economist to Vice President Pence, is expected to be questioned at some length over the Administration’s future plans for Fannie Mae and Freddie Mac, two of the housing government sponsored enterprises (GSEs), regulated by FHFA.  Key members of Congress and the Administration have floated varying plans for the future of Fannie and Freddie, and the broader housing finance system in recent weeks and months.  The hearing will likely serve as a proxy forum for Republicans and Democrats to debate how best to bring Fannie and Freddie out of conservatorship, which have remained under federal conservatorship since 2008. (Roll Call)



2018 New Drugs Approvals: An All-Time Record, And a Watershed:  For months, it had been clear that 2018 would be a banner year for pharmaceutical innovation. The question was, by how much would it shatter the previous (1996) record of 50 approvals (excluding diagnostics and imaging agents)? We now know. It exceeded it by over 20 percent. Last year, U.S. regulators approved a total of 61 drugs – 59 by FDA’s Center for Drug Evaluation and Research plus two recombinant therapies (Andexxa and Jivi) by its Center for Biologics Evaluation and Research. Yet, 2018 stands out not only for the sheer volume of new drug approvals, but also for their quality, and the affirmation of several important trends that could make it a watershed. (Forbes)


Partnerships Between NASA and Industry Can Support Lunar Exploration, Say Two New Reports:  Renewed interest in exploration of the moon has the potential to benefit lunar science greatly and could evolve into a program facilitated by partnerships between commercial companies and NASA’s Science Mission Directorate, say companion reports by the National Academies of Sciences, Engineering, and Medicine. The reports laud the rapid and effective steps the agency’s science directorate has taken in responding to a 2017 presidential directive to lead an innovative and sustainable program of exploration with commercial and international partners, beginning with a near-term focus on the moon.  However, the two reports find that the activities undertaken to date, although aligned with community consensus for lunar science priorities, do not replace missions recommended in the National Academies' most recent planetary science decadal survey and remain subject to many unknowns, such as the ability of standardized commercial lunar landers to interface with complex science payloads. (Space Ref)


Trump to Meet with Kim Jong-un in Vietnam: During his State of the Union address, President Trump announced that he will sit down with North Korea’s leader, Kim Jong-un, at the end of the month in Vietnam, a country chosen as a neutral location for their second nuclear summit meeting, but one that also has plenty of symbolic significance. (New York Times)

Cost of Border Deployments Could Approach $1 Billion by End of Fiscal Year: The cost of President Trump’s deployment of active-duty troops and National Guard forces to the U.S. border with Mexico could approach an estimated $1 billion by the end of the fiscal year should the missions continue apace until then, according to figures the Department of Defense has released and independent assessments. (Washington Post)

U.S. Military Sets April Target Date for Leaving Syria: The Pentagon is preparing to pull all U.S. forces out of Syria by the end of April, even though the Trump administration has yet to come up with a plan to protect its Kurdish partners from attack when they leave. (Wall Street Journal)


Department of Homeland Security Warns of Cyberattacks on Third-Party Companies by China: Chinese hackers have done the math and have figured out that infiltrating the third-party companies that store confidential details about big businesses is more efficient than attacking each of those firms individually, Department of Homeland Security and information security analysts said in a Feb. 6 briefing. (Fifth Domain)

DHS Prioritizes Restart of Election Security Programs Post-Shutdown: Since the shutdown ended, the Department of Homeland Security has prioritized the resumption of its election security programs, some of which were forced to go on hiatus during the lapse in government funding, according to Cybersecurity and Infrastructure Security Agency Director Chris Krebs. (CNN)


Trump: Meeting with China’s Xi Jinping Before Trade Deal Deadline Unlikely: President Trump says he will not meet Chinese President Xi Jinping before a temporary truce in the countries' trade war expires March 1, stoking fears that a deal will not be reached before the 90-day freeze ends. Larry Kudlow, Trump's top economics advisor, told reporters Thursday he still anticipates a meeting between Trump and Xi, CNBC reports, but the details are not yet planned. (U.S. News)


Trump Offers No Infrastructure Details in State of the Union: President Donald Trump's State of the Union address on Tuesday contained even fewer specifics on his plans for infrastructure than in previous appearances, an inauspicious start to a year that infrastructure boosters had hoped would reboot efforts at a major cash injection for roads and rails. (Politico)

Ford Investing $1 Billion, Adding Jobs at Chicago Factories as it Makes Cuts Overseas: Ford is sinking $1 billion and adding more jobs to plants in the Chicago area to expand production of the redesigned Ford Explorer and Lincoln Aviator sport utility vehicles. (CNBC)


Trump Administration and CFPB to Overhaul Payday Loan Regulations: The Trump administration announced it will overhaul an Obama-era payday loan regulation, unveiling a proposal to remove a lending requirement that would have made it difficult for companies to offer high-cost consumer loans. The rule was the first federal effort to regulate short-term lending aimed at lower-income consumers and were set to go into effect in August. The proposal will now go through a fresh administrative process that will take several months to complete, including a 90-day public comment period starting shortly. (Market Watch)


EPA Pushes Back Timeline for Clean Power Plan Replacement Following Shutdown: The Trump Administration has pushed back the timeline for replacing the Obama-era Clean Power Plan in the wake of the record 35-day partial government shutdown, according to US Environmental Protection Agency General Counsel Matthew Leopold. After initially aiming to finalize the Affordable Clean Energy, or ACE, rule by the end of March, the EPA now plans to issue the regulation sometime in the second quarter of this year. (S&P Global)


Trump Gives Ground on His Wall as Border Deal Comes into View: Faced with limited options and a looming deadline to prevent another government shutdown, President Trump is moving toward accepting a border security deal that would fall well short of his once firm demand for $5.7 billion in funds for a wall along the southwestern border. (The New York Times)

Labor & Workforce

Caught in the Cross-Fire of Rising Automation, Heartland Workers Need New Training; Who Pays For It?:  Robotics and AI, within a generation, will be most impactful to the future of manufacturing jobs in the US.  Further automation is expected to completely change how things get made, ushering in a stark reboot of factories and plants, particularly in terms of the quantity of jobs that will become automatized, and the roles, reconfigured, to remain.  Robotics in manufacturing has been a powerful, slow-moving train running people over. The U.S. lost about 5.6 million manufacturing jobs between 2000 and 2010, according to a study by the Center for Business and Economic Research at Ball State University.  As much as 85% of the job losses could be attributable to technological change — largely automation, Ball State researchers found. (Forbes)

Skills Gap Crisis Is Great Threat to US Economy, Congressman Says:  Optimism within the nation’s business world has reached its highest levels in years, yet this optimism is challenged by a growing shortage of skilled workers—an issue that cuts across many industries.  As the U.S. economy continues to expand, investment in workforce education and training have never been more important to sustain growth, according to the National Skills Coalition.  Nearly 80 percent of jobs require some form of education or training beyond high school.  Rep. Glenn Thompson (R-PA) believes that the skills gap problem is one of the greatest threats to the nation’s economy. (The Epoch Times)


FEC Raises Contribution Limits for 2020: Wealthy donors will be able to give their favored federal candidates up to $5,600 in the run-up to the 2020 elections after the Federal Election Commission announced new higher contribution limits on Thursday. The FEC said donors would be able to give up to $2,800 per election — including both the primary and the general election contests — in the new cycle, a $100 increase over the 2018 cycle. The commission raises the donor cap every two years under a provision in the 2002 Bipartisan Campaign Reform Act, better known as McCain-Feingold. (The Hill)


Trump in State of the Union Speech: 'Pass School Choice,' Fund Family Leave: President Trump used his second State of the Union address to call on Congress to enact new school choice legislation—without offering any details on what it would look like—and fund paid family leave for new parents. "To help support working parents, the time has come to pass school choice for America's children," Trump said.  "I am also proud to be the first president to include in my budget a plan for nationwide paid family leave—so that every new parent has the chance to bond with their newborn child." (Education Week)

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