Summer in the City
Tags: Democrats, Republicans, Capitol Hill, Politics, Congress

The President’s approval rating is up, House Democrats show signs of disunity, Robert Mueller testifies on July 17, and Congress is counting down to July 26 when its six-week August recess begins. There is a lot on the congressional agenda over the next three weeks — trade, health care, flood insurance, antitrust enforcement, taxes, privacy, and minimum wage. Overshadowing all of that is continued negotiation over the impending mandatory spending caps and debt ceiling. Here is a topline look at the issues ahead.

Trade by Noah Kowalski

President Donald Trump remains committed to delivering a signature trade win in his first term. After Chinese President Xi Jinping and President Trump’s meeting, U.S. and Chinese negotiators restarted talks in hopes of resolving the ongoing trade war between the two countries. Businesses and consumers breathed a sigh of relief with President Trump’s decision to pause pending tariffs on the remaining $300 billion worth of goods from China (List 4), which could have a serious impact on the economy and consumers.

Meanwhile, United States Trade Representative (USTR) Robert Lighthizer is focused on delivering another win, the proposed United States Mexico Canada Agreement (USMCA), which would replace the North American Free Trade Agreement (NAFTA). House Speaker Nancy Pelosi (D-CA) appointed nine members to a working group to focus on four main areas of concern for the Democratic Caucus: labor, environment, enforcement, and intellectual property protections for pharmaceuticals. The Speaker emphasized any changes to the agreement would be surgical, but necessary, to win support in the House. With the window opening for the Administration to send implementing legislation to Capitol Hill this month, some in the White House are pushing the President and Lighthizer to be more aggressive with the House. Expect to see increased activity through July as talks intensify and potential agreement emerges around some of the major remaining issues. However, the President remains the ultimate wildcard in this delicate dance, as demonstrated by his now-retracted threat to impose tariffs on Mexico over immigration concerns.

National Defense Authorization Act by Annie Palisi

In late June, Senators voted 86–8 to pass the Fiscal Year (FY) 2020 National Defense Authorization Act (NDAA), which authorizes spending for the Pentagon. The House plans to take up the bill this week, authorizing $733 billion for defense compared with the Senate’s $750 billion. The House will grapple with more than 660 amendments and provisions, including an amendment restricting the President’s war powers in response to Iran, restrictions on reprogramming funds to the southern border, and an issue on low-yield nuclear weapon deployment on submarines. There is also a possibility Democrats add a paid family leave provision to the bill to attract additional votes.

After passage, expect staff level negotiations to begin immediately and continue over the August recess. A conference committee will be named by the end of July to iron out the differences between each chamber’s version. This will be the first time Senator Jim Inhofe (R-OK) and Representative Adam Smith (D-WA) are fully leading the process for their respective chambers, which could be an interesting dynamic to watch. Expect both sides to move aggressively to resolve differences even before Members return, with the goal to vote on the reconciled legislation in September.

Health Care by Katie Wise and Ben Klein

Medicare for All may be the hot topic in the Democratic presidential primary, but surprise billing (i.e., patients get stuck with unexpected bills when an out-of-network provider provides care in an in-network facility) and prescription drug prices are the bipartisan buzzwords on Capitol Hill.

Shortly before adjourning for the July 4th recess, the Senate Health, Education, Labor and Pensions (HELP) Committee advanced bipartisan legislation on a 20–3 vote to end surprise billing, address prescription drug costs, and increase health care price transparency. A provision was also added during the committee markup to raise the minimum age for buying tobacco products from 18 to 21. Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) are expected to unveil their own proposal to address high prescription drug prices this month. On the House side, the Energy and Commerce and Ways and Means Committees continue to advance standalone legislation to address surprise billing and prescription drug prices.

Leadership would normally hitch these bipartisan, bicameral legislative priorities on “must-pass” health care legislative vehicles addressing the 15-plus health programs facing cuts, expiration, or funding shortfalls on September 30. However, pay-go rules in the House and health care industry concerns complicate the legislative landscape. While both the House and the Senate indicate health care will be a priority this month, it is unclear whether these bills are ready for prime floor time, let alone agreement on other must-pass health care programs. For example, there are ongoing discussions about updating the distribution formula to Medicaid disproportionate share hospital (DSH) payments. What is more likely to occur is that many of the health care programs with expiration deadlines will be caught up in a short-term continuing resolution (CR) and the more complicated and substantive measures punted to the winter months.

Flood Insurance Reauthorization by Carolyn Coda

After nearly a dozen short-term reauthorizations, the National Flood Insurance Program (NFIP) is once again set to expire on September 30 absent congressional action. In June, the House Financial Services Committee came together to pass a long-term NFIP reform bill. While the bill did not include many of the priorities from both Democrats and Republicans, it was the first time a bipartisan flood insurance reform bill was passed out of committee since the Biggert-Waters Act of 2011. Hurdles for final passage remain, with Senate lawmakers on both sides of the aisle voicing concern about perceived deficiencies in the House bill. The disagreement between the two chambers, in addition to the ticking legislative clock, makes it likely that another short-term reauthorization will be needed before Congress can send the President a substantive reform bill.

Antitrust Enforcement by Eric Rosen

Anger at tech company practices ended years of antitrust policy inaction. Reports indicate federal antitrust regulators continue to review the practices of technology companies, state attorneys general are considering their own investigations, and the issue unites virtually all presidential candidates as Democrats increasingly call for tech company breakups and the President laments online platforms’ alleged anti-conservative bias.

This summer, policymakers are taking a real look at whether the nation’s antitrust laws provide regulators with the tools they need to adequately protect U.S. consumers amid growing concerns of technology company market power. Look to House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law Chairman David Cicilline (D-RI) to continue an antitrust inquiry he began last month — with a hearing on tech’s relationship with the news industry — with additional hearings on the tech sector. House Judiciary Committee leaders will continue to gather information — in public hearings, staff briefings, and likely formal requests for information from companies and organizations — with an eye toward a potential rewrite of the nation’s antitrust laws at the investigation’s conclusion. Action is not limited to the House. The Senate Judiciary Committee will hold a hearing later this month on similar topics and will take testimony from antitrust enforcers at the Department of Justice and the Federal Trade Commission.

Taxes by Carolyn Coda

Lawmakers will resume debate on moving forward on a set of tax and retirement bills. Congress remains in a stalemate over passing the SECURE Act, a bill that includes bipartisan provisions to incentivize taxpayers to save for retirement. The package overwhelmingly passed the House but lingers in the Senate, after a provision to expand 529 accounts was stripped out during House consideration. Congress is also grappling with how to address a series of expired tax provisions (“extenders”) after the House Ways and Means Committee held a markup on the issue but included offsets that are not viable in the Senate. Lastly, industry stakeholders are pushing for movement on technical corrections to the Tax Cuts and Jobs Act (TCJA), including amending the tax treatment of Qualified Improvement Property (QIP) and parking benefits for employees of houses of worship and charitable organizations. While the leaders of the Senate and House tax writing committees publicly state they intend to address the issue this year, the scope of such a package is still up in the air. The contentious nature of these outstanding tax agenda items makes it more likely for any ultimate deal to be included in a larger piece of legislation such as a budget deal or omnibus, which avoids a timely and challenging floor debate.

Privacy by Eric Rosen

It will soon be make-or-break time for proponents of a federal consumer privacy law this Congress. With legislative days in 2019 dwindling, and the historic challenge of enacting sweeping new federal policies in an election year, eyes are on Senate Commerce Committee Chairman Roger Wicker (R-MS) and Ranking Member Maria Cantwell (D-WA) to determine if they can negotiate a bipartisan privacy bill for their committee to consider in the fall. House leaders like Representatives Frank Pallone (D-NJ) and Jan Schakowsky (D-IL) also may produce a proposal, but any Hill effort will have to be bipartisan to have a chance of enactment in time to impact compliance with California’s privacy law set to go into effect on January 1, 2020.

Minimum Wage by Anne MacMillan

One key priority of the House Democratic Caucus coming to the floor next week is H.R. 582, the Raise the Wage Act. This legislation, a major tenet of organized labor’s policy agenda, would gradually raise the federal minimum wage from its current level of $7.25 to $15.00 over five years. The bill would also eliminate the tipped wage, which is commonly used in the restaurant industry. Twenty-nine states, and several metropolitan cities, enacted some form of minimum wage increase, but the rest remain at $7.25 (in place since 2009).

Since its introduction by House Education and Labor Chairman Bobby Scott (D-VA), the bill now counts 205 Democrats as supporters. However, the number of cosponsors remains stubbornly unchanged since April, and House Democratic leadership is currently engaged in a full-throated whip operation to ensure support for final passage. Conventional wisdom says that Democrats will pass the Raise the Wage Act, but what remains unclear is when and what last-minute hiccups might arise between now and final passage. The bill is not expected to receive consideration in the Senate.

Export-Import Bank by Mary Beth Stanton

After the bipartisan markup of the NFIP in the House Financial Services Committee, the chairwoman and ranking member attempted to go for two in a row by turning their attention to the Export-Import Bank reauthorization, which expires on September 30. Chairwoman Maxine Waters (D-CA) worked with Ranking Member Patrick McHenry (R-NC) to include provisions that would prohibit support for deals with Chinese state-owned enterprises, in an effort to garner Republican support for the bill. The same provisions created a backlash among Democrats on the committee whose constituents benefit from foreign sales and the associated jobs. The stalemate over the provisions forced Waters to pull the bill from consideration. The hope is to pass reauthorization in the House this month and give the Senate something to work from.

Appropriations, Debt Ceiling, Budget Caps by Landon Stropko

After a brief bout of legislative ping pong before the July recess, the House and Senate passed a $4.6 billion emergency spending bill requested by the Trump Administration to provide humanitarian and security aid at the southern border. Tensions between House Democratic progressives and moderates were on full display in the border aid debate, and House Democratic leadership ultimately split their votes on the bill. Whether these rifts color the debate to come over the budget caps remains to be seen, and President Trump did not waste the opportunity at the signing ceremony for the border spending bill to call for additional border security legislation. However, there will likely be less daylight between Pelosi and Senate Democratic Leader Chuck Schumer (D-NY) in negotiations over the massive, global budget deal that may be necessary to avoid sequestration, a government shutdown, and a default on the debt.

There are only six legislative work weeks left before the September 30 deadline to fund the government. Little progress is being made toward resolving the caps on defense and domestic spending required by the Budget Control Act of 2011, which imposed those caps through FY 2021 as part of a deal to end a standoff over the debt ceiling. House Democrats, Senate Republicans, and White House officials all seem to agree on the need to avoid the automatic cuts. Still elusive is agreement over the appropriate mix of spending increases, with House Democrats pushing for higher domestic spending increases and more modest defense spending increases than Republican negotiators will accept.

The impasse has not stopped House Democrats from writing and passing 10 of 12 annual appropriations bills (all but the Legislative Branch and Homeland Security Appropriations bills). Attention will now be on the Republican Senate and whether it begins processing its own appropriations bills under temporary numbers as was suggested by Senate Appropriations Chairman Richard Shelby (R-AL). Up to this point, Senate Majority Leader Mitch McConnell (R-KY) preferred not to go through the motions of the appropriations process under top line spending numbers that may ultimately change.

The effort to increase the debt ceiling — something that must be done this fall or risk the U.S. defaulting on its obligations — is being linked to the budget cap negotiations. The United States hit the debt limit back in March, but Treasury is taking “extraordinary measures” to extend the deadline, which could hit as early as September. While the White House floated the idea of a one-year CR paired with a one-year extension of the debt ceiling, Senate Republicans pushed back on the idea, in part because of the adverse impact of a CR on the military budget. That proposal would also leave Members on both sides of the aisle without spending bills to pack with their priorities, in addition to punting the larger fiscal issues to the middle of the 2020 presidential election. Expect congressional leaders to continue pushing for a two-year, combined budget cap and debt ceiling deal until September’s fiscal cliff.