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Window On Washington - January 28, 2019, Vol. 3, Issue 5

January 28, 2019

Outlook for This Week in the Nation's Capital

Partial Government Shutdown Ends!  (For Now):  The longest partial government shutdown in history is finally over.  On Friday evening President Donald Trump signed a short-term “continuing resolution” (CR) spending measure that will re-open the government for three weeks, hours after the House passed a CR to re-open the government for three weeks, following Senate passage earlier that afternoon.  While the 35 day long stalemate ended, a new deadline – February 15, now looms.  Speaker Pelosi suggested that she had “won” the showdown, getting the government reopened without preconditions, and insisting they will still not budge on funding an actual wall, as Democrats feel they did not shoulder much of the blame for the longest shutdown in history (pointing to public polls that lay more of the blame at Trump’s feet) so they say they have little reason to worry about getting blamed for another one over the same issue.  While Congress has clearly reached bipartisan deals on the other 6 appropriations bills for FY19 which they hope the President will sign in three weeks’ time, the Homeland Security bill still lurks as the likely cause of a big Washington “hangover” after Valentine’s Day….

White House:  While the President agreed to a temporary deal, he still tried to frame it as “in no way a concession” despite conservative critics labeling it just that.  Trump also warned Friday in announcing the three-week funding deal that if he cannot get a "fair deal" by next month the government could shut down again or he may declare a national emergency to sidestep Congress and build a border wall, a move that would almost certainly draw legal challenges delaying any actual wall construction.  

SOTU:  While the President and Congressional leaders cut a deal to re-open the parts of the government shutdown since Dec. 22, we still don’t know when the State of the Union will happen.  Speaker Nancy Pelosi reiterated what she said to the President in her recent letters, that when the government is open she would discuss with him a mutually agreeable date for the address.  House Republican leaders believe it should now be rescheduled as soon as possible, but it is unclear if that will happen, given the temporary nature of this government “re-opening”. 

Last Week in the Nation's Capital


Budget & Appropriations

As part of the CR agreement, the House and Senate also agreed to motions to go to conference on the FY19 Homeland Security Appropriations Act, where they will debate border security issues and disagreements in hopes of finding agreement in the next three weeks before the CR expires. Seven Senators were named as conferees for the Homeland Security spending bill, as were ten Members of the House. There is not a huge amount of hope that a deal to fund an actual wall can be reached in the next 3 weeks by this group, that the White House will also accept, which means this group will also likely start advocating for a longer term CR to provide more time to work this problem. This drawn out uncertainty to resolving FY19, and the impact of the shutdown on preparing FY20 budget, seems sure to delay parts of the annual budget and appropriations process on Capitol Hill in the coming weeks and months, despite the likely efforts the Committee chairs to get them back on track quickly.  (Clark Hill Insight) 

Tax Reform

Conservative Groups Press Trump to Reduce Capital Gains Taxes: In a letter sent last week, a group of conservative organizations is pressing President Donald Trump to take executive action to reduce capital gains taxes, since legislation to cut taxes is unlikely to pass in the new divided Congress. The group is calling on Trump to index the calculation of capital gains taxes to inflation, which would reduce the amount of money subject to capital gains taxes. (The Hill)


Democrats Seek More Oversight of Education Secretary Betsy DeVos: Wielding control of the House and a new set of investigative powers, Democrats are preparing to bring Education Secretary Betsy DeVos under the sharpest scrutiny she has seen since taking office. DeVos has emerged as a common target for Democrats as they take charge of the House and its committees, which carry the authority to issue subpoenas and call hearings. At least four panels are expected to challenge DeVos on her most polarizing policies, among them her overhaul of campus sexual assault rules and her rollback of for-profit college regulations. (PBS)


51 Democrats Want to Block Trump From Using Military to Build Border Wall: Amid reports President Donald Trump is drafting a national emergency to divert Pentagon funds for his border wall, 51 House Democrats signed a letter, led by Rep. Jan Schakowsky (D-IL), to House Armed Services Committee Chairman Adam Smith (D-WA), asking that Smith use the fiscal 2020 National Defense Authorization Act to assure the administration “cannot utilize a fake ‘national emergency’ to co-opt the military into the construction of the President’s wall.” (Defense News)


Hack Your State Department Act Passes in House: Last Tuesday, the House nearly unanimously passed a bill that directs the State Department to encourage qualified white-hat hackers to help the agency patch critical vulnerabilities. H.R. 328 would give State six months to create a vulnerability disclosure process and an additional six months to report to Congress on its status. The bill heads to an uncertain future in the Senate, which lacks a companion measure. (Clark Hill Insight)


GOP Mulling 'Nuclear Option' To Speed Judicial Nominations: Republicans could again turn to the “nuclear option” to change Senate rules and advance President Donald Trump’s nominees, one senator said, cutting down the time the Senate takes on judicial and other nominees. The move would come after months of complaints from Republicans that Democrats have thrown up procedural roadblocks in front of otherwise-qualified Trump nominees and revives a similar proposal to change the rules from last Congress. Several Republicans have said they’ve discussed making the move, which would be the latest step in escalating changes to the Senate rules in the past several years. (Law 360)


Pallone Announces Hearing on Shutdown’s Impacts Jan. 31: The House Energy and Commerce Committee will hold a hearing on the shutdown’s impacts to federal agencies within its jurisdiction Jan. 31, altering plans for its first hearing to be on climate change, Chairman Frank Pallone (D-NJ) announced on Thursday. (Clark Hill Insight)


White House

‘Complete, Total Surrender’: Why Trump Waved the White Flag: President Donald Trump touted GOP unity for 33 days of a partial government shutdown. But by the 34th day, it was clearly gone — and so was the shutdown by the end of the 35th. Senate Republicans had finally had it and were struggling to continue to defend the President's position and heap blame on the Democrats. (Politico)

OMB Asks Agencies to Prepare for 'Orderly Reopening': Office of Management and Budget Deputy Director for Management Margaret Weichert in a memo to agency heads told them to take steps in anticipation of reopening. Priorities include recalling furloughed employees, "restoring pay and benefits for employees" and ensuring access to equipment and information technology systems, she said. (Government Executive)


Former FDA Reviewers Advocate Reforms to NIH Indirect Costs and Survey Sections:  The authors argue that the NIH could be a leaner and more innovative organization, but that such a transformation would require elemental reforms in how it supports indirect costs and its reliance on study sections to review grant proposals.  Capping indirect costs, especially for large institutions, and switching from volunteer to “professional” grant reviewers, would certainly qualify as two rather radical reforms. (Stat News)

Fitbit and NIH Boost Precision Medicine Research Partnership:  San Francisco, California-based wearables company Fitbit has partnered with the National Institutes of Health on the organization’s All of Us Research Program, which seeks to gather health data from one million Americans to accelerate and improve research into precision medicine.  As the first wearable to be included in the program, Fitbit users can now link their accounts to the project to help researchers better understand the relationship between fitness and wellness metrics like physical activity, heart rate and sleep to larger health outcomes. (Med City News)


Blue Origin New Shepard Rocket Successfully Flies 8 NASA Research And Technology Payloads to Space:  The launch was the 10th successful mission for the New Shepard program and the 4th flight for this vehicle, and was another “practice run” towards launching regular payload flights and their goal of  lowering the cost of access to space and helping to move “heavy industry off Earth”.  Blue continues to scale up its systems and will be launching additional payloads on its nest test flight. (Space Ref)

Tempers Flare When Meteorologists Discuss Commercial Weather Data Buys:  Everyone seemed calm at the annual American Meteorological Society (AMS) conference in Phoenix, sharing research and discussing public policy, until someone mentioned commercial weather data. Suddenly voices grew louder, one speaker interrupted another and tempers flared.  As commercial companies expand their role in gathering and disseminating weather data, academic and government researchers are deeply concerned they will lose access to the data that fuels their work. These concerns, while not new, have been brought into sharp focus by the emergence of startups building constellations of cubesats. (Space News)


Supreme Court Allows Trump Administration to Enforce Transgender Military Ban: The Supreme Court on Tuesday allowed the Trump administration to go ahead, for now, with its plan to ban transgender military service. The court, without comment, granted a request from the Justice Department to allow the government to enforce the ban while challenges to the policy play out in the lower courts. (NBC News)


FERC Review of Williams Pipeline to Supply National Grid Finds Little Environmental Impact: In an impact statement released last week, the Federal Energy Regulatory Commission said that the controversial Williams pipeline from New Jersey into New York won’t cause much damage the environment. The report is a key step for the Northeast Supply Enhancement project, a 37-mile pipeline in the New York Bay that plans to supply natural gas to Long Island and New York City. The report concludes that environmental impacts from the project will be reduced to “less than significant levels” by mitigation agreed to by the company. (Clark Hill Insight)


Trump's China Tariffs Likely to Be Investigated by the WTO: Tensions between the U.S. and China are about to get more complicated, with the World Trade Organization poised to begin an investigation into President Donald Trump’s tariffs on $250 billion of Chinese goods. On Monday, the Geneva-based arbiter of trade disputes will likely launch an inquiry into whether the U.S. duties run afoul of a requirement that all WTO members give each other the same tariff treatment, as China asserts. (Bloomberg)


CFPB Asks Congress for Authority to Sniff out Predatory Military Lenders: The leader of the Consumer Financial Protection Bureau is asking Congress to give the agency explicit authority to examine financial services companies for compliance with a law that caps how much a creditor can charge military servicemembers for loans. In letters sent Thursday to Vice President Mike Pence and House Speaker Nancy Pelosi, CFPB Director Kathy Kraninger submitted a legislative proposal to “clarify” the bureau’s authority to supervise compliance with a military lending law designed to protect servicemembers from certain lending practices that may be considered predatory. (Roll Call)


Waymo to Build Self-Driving Cars Near Detroit: Waymo, which in December launched the nation's first paid robotaxi business, is taking the next step toward commercialization with a deal to assemble self-driving cars at a new factory in Michigan. (Axios)

TSA Workers Might Not Return to Work After Shutdown, Experts Worry: Many screeners are likely finding new jobs, according to some experts, who warn about staffing shortages and security lines. (Roll Call)


DHS Directive Demands DNS Defense: After a FireEye report two weeks ago outlined a multiyear campaign of so-called DNS hijacking, Homeland Security is ordering federal agencies to investigate and secure security holes in their internet infrastructure. (Axios)

DHS Plans to Begin Turning Asylum-Seekers Back to Mexico to Await Court Dates: The Trump administration plans to begin turning asylum-seekers back across the southern border on Friday to wait in Mexico under a new policy designed to crack down on immigration by Central American families, according to three Department of Homeland Security officials familiar with the matter. (NBC News)


Indicting Roger Stone, Mueller Shows Link Between Trump Campaign and WikiLeaks: The special counsel, Robert S. Mueller III, revealed on Friday the most direct link yet between the Trump campaign’s and WikiLeaks’ parallel efforts to use Democratic Party material stolen by Russians to damage the election campaign of Hillary Clinton. (The New York Times)

Labor & Workforce

The Geography of Opportunity:  Work hard and get ahead. That, in a nutshell, is the American dream. For that bargain to thrive, Americans need access to the kind of jobs that reward hard work, or a local economy that lets them start a business. And increasingly those opportunities are not spread evenly across the American landscape. Virtually all the jobs created in the past decade have occurred in a handful of U.S. cities, and business creation is at a 30-year low.  (Politico)

Banking & Housing

White House Plans to Overhaul Housing Finance System, Top Regulator Says:  The White House will announce a plan by next month to end government control of Fannie Mae and Freddie Mac in a bid to resolve a long debate over the fate of the two companies that dominate the mortgage market, a top regulator said.  Joseph Otting, acting director of the Federal Housing Finance Agency, told employees last week that the administration would not wait on Congress, where attempts to overhaul the housing finance system have repeatedly faltered in the years since Fannie and Freddie were rescued during the financial crisis. (Politico)


Immigration Spending Surges as White House Calls for More Funds: Federal contract spending for immigration enforcement and processing surged nearly 40 percent over the past four fiscal years with two of the top earners being private prison companies that have faced multiple allegations of inhumane treatment of migrants. Total spending in fiscal 2018 was $7.4 billion compared with $5.3 billion spent four years ago. CoreCivic Inc. and the GEO Group Inc., which provide detention services, migrant transportation, and other services, received boosts of $85 million and $121 million respectively over the four-year period. (Bloomberg Government)

Immigration Court Backlog Piled up in Maryland, Nationally During the Government Shutdown: As the federal government’s partial shutdown dragged on, immigration courts across the nation — including in Maryland — cancelled tens of thousands of hearings due to lapsed funding for the Department of Justice, according to Syracuse University's Transactional Records Access Clearinghouse, or TRAC. (Baltimore Sun)


IRS Releases Rental Real Estate Safe Harbor and Final Regulations for Section 199A Deduction: The IRS has released the long-awaited final regulations on the Section 199A qualified business income deduction. Along with the regulations, the IRS released Notice 2019-07 that contains a proposed revenue procedure with a safe harbor for rental real estate enterprises to qualify for this 20 percent deduction. The safe harbor is very important for businesses involved in commercial or residential real estate rentals because it gives certainty as to whether they meet the “trade or business” requirement necessary to claim the deduction. (Clark Hill Insight)

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