Federal Update: Returning from Summer Recess, Congress Faces a Full Schedule

September 8, 2017

After a month-long recess, Congress returned this week to a challenging slate of must-do items, looming deadlines, emergency funding requests for hurricane aid, and the rescinding of the DACA program. As congressional leaders consider how to address such an extensive list, they must navigate between the White House’s shifting priorities, limited consensus in their own ranks and mainly united Democratic opposition. Further, their strategy will now have to be reconsidered, as the President struck a surprise deal with Democrats this week to package emergency hurricane aid with a temporary stopgap funding measure and short-term suspension of the debt limit.

While that deal, which passed the House and Senate, provides lawmakers more time to time to chart a path forward on their extensive to-do list, it simply forestalls the threat of a government shutdown into early December. In the three months to come, congressional leaders will continue to face significant pressure to make progress on tax reform, sequester relief, infrastructure, healthcare and, given the events of this week, legislation to help Dreamers. Below is an overview of those issues and some insight on how they might proceed.

CR, Debt Limit, and Harvey Relief

A potential late-September showdown over funding the government has been delayed on account of the urgent relief needs following Hurricanes Harvey and Irma. Yesterday, the Senate approved (80-17) a package that will fund federal agencies and suspend the debt ceiling through December 8 and includes a $15.25 billion down payment for disaster response. The House approved the measure today (316-90). Treasury’s use of extraordinary measures could delay the next debt limit debate until 2018.

Because the Budget Control Act’s statutory cap on spending in FY18 is lower than current levels, the continuing resolution (CR) funding measure contains a small across-the-board reduction in all discretionary programs (hurricane relief is not subject to the caps). Though small, this cut could intensify pressure for a bipartisan deal to raise caps overall and finalize FY18 spending in December. Of note on the policy side, the CR contains language that prohibits the Administration from capping NIH’s facilities and administrative (F&A) costs reimbursement rate.

FY18 Funding Outlook

The outlook for any final FY18 funding agreement is still very much unclear, as both sides remain far apart on key issues. The White House and congressional Republicans, particularly in the House, are hoping to increase defense and border-security spending significantly, while Democrats insist on equivalent increases for non-defense funding in the face of significant needs and consistent with past agreements. Any change in the spending caps to allow for additional spending, either for defense only or for both defense and non-defense, would require amending the existing Budget Control Act, which requires 60 votes in the Senate. In addition to this impasse on overall funding levels, the President’s insistence on funding for a border wall in FY18 and Democrats’ set opposition to it has raised the specter of a potential government shutdown when the just passed-CR expires in December, and could impede progress on negotiations toward a bipartisan agreement on how to proceed with the FY18 budget and appropriations.

In the meantime, Congress will continue to take preliminary steps toward formulating a final spending package. This week, the House took up an FY18 omnibus funding measure that includes all 12 appropriations bills. While attracting significant attention, this bill does not comply with the current budget caps, so cannot be viewed as a viable final package. However, the measure’s funding levels and policy provisions provide insight into member priorities and what will require negotiation with the Senate in any final deal. In research, the House allocates an additional $1.3 billion for NIH, along with language blocking the Administration from making changes to reimbursements for F&A costs. Other research programs are generally close to flat with the exception of ARPA-E, which would be eliminated as the president requested. The House rejected the White House’s calls for eliminating NEH, NEA and international education and foreign languages programs – though would cut each – and otherwise continues current funding for student aid accounts.

For its part, the Senate is not nearly as far along on its appropriations work, but is expected to make progress in committee this month. This week, Senate appropriators approved a bipartisan funding bill that provides a $2 billion increase for NIH and included language similar to the House’s prohibition on the Administration from capping F&A costs. The same bill also provides a slight increase to the maximum Pell Grant award, and increased or generally flat funding for student-aid accounts. No bills have yet reached the full Senate.

DACA

The Administration announced this week that it will no longer accept new DACA enrollment applications and will rescind the program on March 5, 2018. Rather than eliminating current program recipients’ deferred action protections and work authorizations immediately on that date, program participants will maintain their status through their enrollments’ expiration dates. However, upon expiration, these young people, including dozens of Harvard students, will be subject to deportation.

The March 5 deadline establishes a short window of action, in legislative terms, for Congress to act on an issue it has not agreed to since the DREAM Act was first introduced in 2001. The University has and will continue to strongly advocate for bipartisan legislation to protect this vulnerable population. There are already reports of nascent discussions between the parties on pairing DACA-related legislation to “modest” border security measures – in other words, separate from the President’s desired border wall – but nothing concrete.

Program and Agency Reauthorizations

Also looming are the reauthorizations of several critical agencies and programs that are set to expire at the end of the month. Among these are the Federal Aviation Administration, the Children’s Health Insurance Program (CHIP), and the National Flood Insurance Program. Since time in September is so short and each of these bills include contentious issues, reauthorizations will likely be short-term or modest in nature. It may also be that they get swept into larger negotiations and approved along with funding or other legislation.

Health care and Tax Reform

Congressional Republicans’ top priorities at the start of the year were to repeal and replace the Affordable Care Act (ACA) and enact comprehensive tax reform. Without Democratic support, both rely on the same expedited legislative framework, a reconciliation bill that spins off from a budget resolution and allows for passage by a majority vote in both the House and the Senate. However, because of its relationship to the budget, there can be only one reconciliation bill at a time. This leaves a very short window for the FY17 reconciliation bill that has thus far been the vehicle for the repeal/replace efforts. Republicans now essentially must choose whether to try again on repeal this month in the midst of all their other business, and then move on to tax reform, or abandon health care and move on now. In either case, moving on requires passing an FY18 budget resolution that includes reconciliation instructions on tax reform.

Earlier this summer House Republicans tried and failed to enact a FY18 budget because of significant intraparty disagreements regarding funding and entitlement cuts. These issues remain intractable and expectations are that leadership will eventually force them to be set aside so that a budget can be adopted that is silent on overall fiscal policy but provides reconciliation instructions for tax reform. And while that would constitute progress, there remain major areas of disagreement on fundamental tax reform, leaving yet another GOP priority mired in uncertainty. Regardless of difficulties ahead in the legislative process, Republicans in both chambers expect to take early steps toward tax reform this month, likely hearings and further closed door negotiations, with detailed legislative proposals waiting until later this fall. It may also be in the midst of the FY18 funding issues and the need to address the caps, tax and health care could be pulled into the mix.

Looking Ahead

Given the approval of a three-month CR and debt-limit suspension, much of September’s work will spill over into the remainder of the year. Beyond tax and potentially health care, the Trump Administration continues to work on an infrastructure proposal with expectations of consideration this year. The Senate is also expected to resume its work on the Defense Authorization bill, likely when Senator John McCain (R-AZ) returns from cancer treatment, perhaps as early as next week. The House has already passed its measure and this is viewed as a must do by the end of the year. Whether consideration of legislation concerning DACA happens before the end of the calendar year remains to be seen, as those discussions have only just begun.

This long to-do list is particularly frustrating to Republican leaders, who had high expectations of single-party control in Washington. Instead of expected progress on their priorities, there are few concrete accomplishments (beyond nominations) to point to heading into a very busy fall. It seems likely this dynamic, and the coming mid-term elections in 2018, will raise the stakes on the debates this fall with pressure building on the majority for some gains.

Harvard’s Advocacy

During this busy month and through the fall, my team in Washington will remain closely engaged with alumni and key policymakers to advocate for the University’s priorities. While these and many other issues advance or emerge, we will keep you informed with the latest significant developments and results. As always, please feel free to reach out to Jon Groteboer (jon_groteboer@harvard.edu) or me (suzanne_day@harvard.edu) with any questions or concerns.