Congress seeks elusive consensus before summer recess

Barring cancellation of a portion or all of the scheduled summer recess—an event not currently expected despite the requests of several Republican senators and House members, as well as conservative media personalities—the House, when it returns for legislative business on July 11, will be in session for only 13 days before leaving on July 28, not to return till September 5. The Senate returns a day earlier, on July 10, and is scheduled to be in session for 15 days before also leaving for summer recess on July 28 and returning on September 5.

Below is an overview of some of the matters that may receive Congressional consideration before the end of July and our assessment of their current prospects.

Health care reform legislation

Senate GOP leadership decided on June 27 to delay consideration of the Better Care Reconciliation Act (BCRA), their proposed legislation to repeal and replace Obamacare. After several GOP senators stated their opposition to the BCRA draft, Senate Majority Leader Mitch McConnell (R-KY) was short of the votes he needed to bring the bill to the Senate floor. He has now spent his 4th of July holiday on the very challenging task of threading the needle and making changes to the BCRA that can win the votes of 50 Republican Senators to bring such health care legislation to the Senate floor and pass it.

To do so, Leader McConnell must address the concerns of conservative Republican Senators who say that the current version of the BCRA does not repeal and replace enough of the Affordable Care Act. At the same time, Leader McConnell also must be responsive to those moderate Republican Senators who say, among other things, that the cuts to Medicaid under the bill ($772 billion) are far too severe.   In addition, the CBO score that the bill would result in an estimated 22 million additional uninsured persons by 2026 is an attention-grabbing headline that has stoked public opposition to the bill.

Leader McConnell wants to bring a revised repeal-and-replace bill to the floor as soon as possible after the July 4th recess   The Congressional Budget Office is currently reviewing legislative language sent by Leader McConnell and will score the fiscal impact of these potential changes to the BCRA bill. The Senate parliamentarian will also have to consider whether these proposed changes can properly be raised in a reconciliation bill. These factors are likely to push any roll call on a revised BCRA bill to the last half of July, either during the weeks of July 17 or July 24, rather than immediately after the July 4 recess.

It currently seems as if any overture that Leader McConnell makes to either the conservative or more moderate wings of his Conference in an effort to win votes for the bill threatens the willingness of the other wing to support it. The key open question is whether Leader McConnell, an extremely skilled legislative tactician and veteran horse trader, can craft a compromise that will attract enough votes from both conservative and moderate Republican Senators to get to 50 votes.

The passage, or the abandonment, of Affordable Care Act (ACA) repeal-and-replace legislation, and when these events occur, is likely to have an enormous impact on the timing, the terms, and the likelihood of success for many key elements of the Republican legislative agenda. If the status of ACA repeal-and-replace legislation is not resolved until the final week in July, it surely will delay consideration of many of the subjects that Congressional Republicans hoped to consider before leaving at the end of July for their summer recess.

FY18 budget resolution

Because adoption of a fiscal year 2018 budget resolution will vitiate the reconciliation process of the FY17 budget resolution under which ACA repeal-and-replace legislation currently is being considered, the House will not adopt an FY18 budget resolution until it is definitively determined whether ACA repeal-and-replace legislation can be enacted through use of the reconciliation process.

House Budget Committee Chair Diane Black (R-TN) has been unable to finalize a budget because conservatives are demanding huge cuts to mandatory programs, such as food stamps. No agreement presently exists on how to spread the pain of the $200 billion in mandatory spending cuts (down from $500 billion in Chairman Black’s initial draft) that are necessary to offset the cost of the additional military spending that Black proposes. Republican moderates with concerns about the budget resolution say passage of such a resolution will make it more difficult to pass tax reform. Even if the House Budget Committee manages to push through a budget resolution at some point in July, it’s unclear whether it will be able to attract enough support from Republican moderates to make it through the House.

The Tuesday Group (moderate Republicans), because of their concern about the impact of entitlement cuts, particularly to Medicaid, on the public, and their belief that these mandatory spending cuts could “imperil tax reform,” has asked House Speaker Paul Ryan to delay consideration of a budget until health care legislation is passed or abandoned so that the members have a clearer idea of what the fiscal picture looks like. They have threatened to oppose the curbs in entitlement spending unless there is a bipartisan deal to increase spending caps. At the other end of the spectrum within the House Republican Conference, Freedom Caucus members say that they will back an FY18 budget resolution only if it cuts mandatory programs, including Medicaid and food stamps. (The Freedom Caucus and the Tuesday Group each represent enough House Republicans that either group’s opposition to an FY18 budget resolution would be sufficient to bring about its defeat.)

Moderates say that the budget resolution’s proposed $621.5 billion in defense spending (not including war funds) also would violate the law by exceeding the $548 billion cap on defense spending for FY18 under the Deficit Reduction Act.

FY18 appropriations bills

The continuing struggle over ACA repeal-and-replace legislation has delayed consideration of an FY18 budget resolution. The failure to adopt an FY18 budget resolution has left the Appropriations Committees in the dark as to the overall level of resources that will be available for spending in FY18. As a result, the FY18 appropriations bills are being marked up without any section 301 overall spending limit or any section 302(b)s divvying up the overall spending limits among the various appropriations bills.

The foregoing factors have led to a backlog in the appropriations process. With only 25 legislative days remaining in the House before FY17 ends on September 30, the House Appropriations Committee has now marked up about half of the bills and has reported to the House only its version of the FY18 Military Construction and Veterans Affairs Appropriations bill. With 27 legislative days remaining in the Senate until the FY17 fiscal year expires on September 30, the Senate Appropriations Committee has yet to mark up and report to the Senate any of the FY18 appropriations bills.

This backlog has led some House Republicans to propose that some or all of the appropriations bills be packaged in a single bill to be taken up by the House before the August recess as a way to accelerate consideration of the FY18 bills. Whether the House Republican leadership elects to move forward with such an omnibus appropriations bill, the delays in the appropriations process and the inactivity to date in the Senate on appropriations bills make it highly likely that a continuing resolution will be required to fund the federal government’s operations after September 30 and avoid a government shutdown.

Debt ceiling increase

Treasury Secretary Stephen Mnuchin wants the debt ceiling raised before the summer recess and a vote on raising the debt limit may be held immediately before the long August recess if health care has been dealt with by the end of the month, though it could slip to September if Treasury offers reassurances to Hill leaders that such a timeline would work. (The Congressional Budget Office says that, currently, extraordinary measures can get Treasury to October before the debt ceiling is reached.)

Health care has to get done first says House Majority Leader Kevin McCarthy (R-CA). The unanswered question is whether a coalition of Democratic and Republican members can be mobilized to pass a “clean” debt ceiling increase or whether Congressional Republicans will attempt the far more difficult task of tying an increase in the debt ceiling to the adoption of further spending cuts.

Tax reform

Comprehensive tax reform legislation is not expected to be introduced and considered by Congress before the summer recess. The Big Six—Treasury Secretary Mnuchin, National Economic Council Director Gary Cohn, Speaker Ryan, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady and Senate Finance Committee Chairman Orrin Hatch—have been meeting to discuss tax reform, with the goal of reaching agreement on a framework to be considered by the House and the Senate this fall.

Meanwhile, Ways and Means will hold tax reform hearings in July, with a hearing on how tax reform will help small businesses grow and create jobs already scheduled for July 13. The Senate Finance Committee, for its part, will begin considering comments it has received as a result of Chairman Hatch’s June 16 request for submissions and recommendations for tax reform (Chairman Hatch’s letter gave a deadline of July 17).

Perhaps the most significant event for tax reform in July will be how the Senate deals with health care reform, as passing or failing to pass health care legislation will directly impact both its likelihood of success and potential scope. The reconciliation process can’t be used for tax reform unless and until there is an FY18 budget resolution and an FY18 budget resolution can’t be addressed until ACA repeal-and-replace legislation is disposed of, one way or the other.

Conflict in Iraq and Syria: Debate on the 2001 Authorization of Military Force (AUMF)

On Thursday, June 29, the House Appropriations Committee approved an amendment to the FY18 Defense Appropriations Act from Congresswoman Barbara Lee (D-CA). The amendment would repeal the 2001 Authorization for the Use Of Military Force (AUMF) 240 days after enactment of the Department of Defense Appropriations bill. As of 2013, the AUMF had been invoked more than 30 times to authorize troop deployments and other military measures, including detentions at Guantanamo Bay and military trials for terrorism suspects.

According to the Congressional Research Service, the AUMF has been used more than 37 times in 14 countries to justify military action. Under Presidents George W. Bush and Barack Obama, the AUMF was used to justify the deployment of US forces to Afghanistan, the Philippines, Georgia, Yemen, Djibouti, Kenya, Ethiopia, Eritrea, Iraq and Somalia. President Obama also used it to justify military action against ISIS, a group that did not even exist when the AUMF was adopted in 2001.

While Rep. Lee’s AUMF language is expected to be stripped from the FY18 Defense Appropriations bill at some point before it becomes law, the inclusion of this language in the text of the Defense Appropriations Act, as adopted by the House Appropriations Committee, makes it likely that the House, and possibly the Senate as well, will have a debate on the relevance and propriety of the AUMF language at some point before the Defense Appropriations Act becomes law. GOP military veterans have voiced strong support for a debate on the AUMF.

Flood insurance

Authorization for the National Flood Insurance Program expires at the end of September. A dispute in the Senate Banking Committee over a privatization proposal offered by Senator Jon Tester (D-MT) is keeping the version of an NFIP reauthorization from moving forward to date in the Banking Committee.

The House version of an NFIP reauthorization is further along. On June 15 and June 21, the House Financial Services Committee approved a package of seven flood insurance bills. While the House has yet to take up these bills, the chamber is expected to vote at some point in July on a five-year reauthorization of the NFIP. That said, several members of the Louisiana delegation say that because of reductions in funding levels and several controversial privatization proposals, this package of bills currently lacks the votes to pass the House. (The National Association of Homebuilders, the National Association of Realtors and many members of Congress are said to oppose the House bill.).


While many observers hoped and believed that a proposal to upgrade America’s roads, bridges and airports would be an early priority for the Trump administration—as well as one with the potential to attract bipartisan support—it now seems clear that infrastructure sits behind health care, tax reform, a debt ceiling, government funding and even an FAA reauthorization on the administration’s legislative wish list.

On June 29, with the White House still yet to unveil formal legislative text for its massive infrastructure proposal and not expected to do so until the fall, Senate Commerce Committee Chairman John Thune (R-SD) observed that congressional work on the president’s $1 trillion infrastructure package would likely slip to next year.

FAA reauthorization

The House and Senate committees of jurisdiction have marked up two separate versions of FAA reauthorization bills, the major difference being air traffic control reform. The Senate bill lacks the ATC reform language and is very similar to the comprehensive bill passed (with a bipartisan majority) in the Senate in the 114th Congress. Congressman Bill Shuster (R-PA), chair of the House Committee on Transportation and Infrastructure, wants to bring his bill to the floor in mid-July. However with the expectation of a highly contentious dispute over the ATC privatization proposal, the bill’s prospects in the House are uncertain. Meanwhile, consideration of the Senate FAA reauthorization bill may be delayed by the pendency of health care legislation in the Senate.

Washington on one page: June 26

THE LEDE:  Leader McConnell drops 142 page discussion draft, while 7 GOP Senators express “real concerns.” The Washington Post writes that Obama tried to retaliate against Russian intrusion into 2016 election. Trump doesn’t have tapes of Oval conversation with Comey. POTUS continues North Korean and Western Balkans “national emergency” designation. President Trump meets with President Petro Poroshenko of Ukraine and President Varela of Panama. POTUS tightens US policy towards Cuba. Ping Pong Pizza shooter gets 4 years. House Majority Whip Steve Scalise’s condition has been upgraded from “serious” to “fair.”

THE WEEK AHEAD:   Better Care Reform Act CBO score due. Secs Pruitt & Acosta, Chairman Clayton and Ambassador Haley make the appropriating and authorizing swing. Chairman Chaffetz resignation effective 6/30. Sanctauary cities bill to move in judiciary and to the floor. NDAA in House Armed Services


PREVIOUSLY CONFIRMED- Deputy Secretary of State, Associate Attorney General, Deputy Secretary of Transportation,  Sec. of Air Force, FDA Commissioner, US Trade Representative Chairman of the SEC,  Sec of Agriculture, Sec of Labor   Associate Justice of the Supreme Court , Amb. To Israel  Admin of CMS, Director of National Intelligence, Sec. of HUD, Sec. of Energy, Sec of Interior,  Sec. of Treasury, OMB Director,  Attorney General, Sec. of Education, Sec of Veteran’s Affairs , EPA Administrator, Small Business Admin, Sec. of HHS, Sec. of State, Sec of Transportation, Director of CIA, Sec. of Defense, Amb. to the UN, Sec. of Homeland,  Sec. of Commerce

PRESIDENTIAL MEMORANDUM & EXECUTIVE ORDER TRACKER:   Presidential Memoranda Cuba  Jerusalem Embassy Act  Stabilization of Iraq  Aluminum Imports    Offshore Drilling, VA Accountability, Local Control of Education, Review of Antiquities Act, Rural American Prosperity : Orderly Liquidation Authority, Financial Stability Oversight Council, Steel Imports and Threats to National Security  Executive Branch Re-Org    Travel Ban 2.0 Memo for USSS, USAG, USSHS     Fiduciary Duty RuleNational Security Council,  Defeat ISIL,   Pipeline Construction, American Pipe,  Domestic Manufacturing,  TPP, Hiring Freeze, Mexico City (Abortion), Memo to Executive Departments and Agencies  Executive Orders: North Korea   Western Balkans Cyber security    Election Integrity   Promoting Free Speech & Religious Liberty Identifying Tax Burdens, Buy American and Hire American  Principles for Reforming the Military selective Service Process  Climate,   Addiction & Opioid Crisis , Report on Trade Deficits,  Trade Enforcement Travel Ban 2.0  Regulatory Reform Task Forces,  Crime Reduction, Drug Cartels, Law Enforcement protection, DOJ Succession,  Dodd Frank,  2 for 1 Reg,    Border and Immigration Enforcement, ObamaCare, Public Safety, Expediting Environmental Review Process, Visa Restrictions

POTUS: Trump said he does not have tapes of his conversations with now-former Federal Bureau of Investigation Director James Comey. He also said he has “no idea” whether such tapes exist.. President Trump signs the Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017

CONGRESS: House Republicans are not yet in agreement on a spending plan for fiscal year 2018, a step that needs to be completed before they can move onto tax reform. Even without a budget in place, House Republicans advanced the second of 12 annual spending bills needed to fund the government — with more on the way.

ENERGY: The White House announced preparations for an energy focus for its upcoming policy-themed week, as President Donald Trump is expected to promote “energy dominance.”

HEALTH: NYT Whip List Tracker. The Affordable Care Act gave health insurance to millions of Americans by shifting resources from the wealthy to the poor and by moving oversight from states to the federal government. The Senate bill introduced Thursday pushes back forcefully on both dimensions.

RUSSIA:  Near the end of his term, former President Barack Obama authorized the planting of cyber weapons in Russian infrastructure, part of his response to the U.S. intelligence community’s conclusion that Russian President Vladimir Putin was directly involved with meddling in the 2016 presidential election.. During his testimony before the House Intelligence Committee, former Homeland Security Secretary Jeh Johnson said Russia organized cyberattacks against the United States to influence the presidential election.

SPECIAL ELECTION: This may sound harsh but, in a reliable GOP district, the GOP candidate, who holds state wide office, beat an under 30 year old first time candidate who didn’t live in the district.  The circular firing squad was assembled with Leader Pelosi seemingly in their sights.  Leader Pelosi responds that she is “worth the trouble.”

TRADE: Ag Sec Predue held trilateral meeting with Agriculture Minister Lawrence MacAulay and Mexican Secretary of Agriculture José Calzada Rovirosa in Savannah, Georgia

TRAVEL BAN: A federal judge in Hawaii narrowed his injunction against Trump’s travel ban, allowing the administration to move forward with studies and policy reviews his executive order also called for.

TRANSPORTATION: Asset Recycling. You’ll be hearing a lot about this in the coming transportation debate.  Learn about it here.

Have questions, comments, want some follow up?  You can reach us here, here or here.

Six ways the Senate Obamacare replacement plan differs from the House bill

After an eight year effort to dismantle Obamacare, Republicans are closer than ever to redesigning significant portions of the law. While the politics in the Senate are quite similar to those in the House debate–conservative senators want an aggressive repeal and centrists warn of cutting entitlements too much and too fast–the Senate discussion draft deviates from the devastatingly unpopular House-passed bill in six significant ways.

Changes to Medicaid Expansion. Senate centrists oppose the House Medicaid cuts, including a phase out beginning in 2020 of the extra money the federal government has provided to states as an incentive to expand Medicaid program eligibility. The Senate discussion draft would gradually phase out the Medicaid match rate after seven years, not three, through 2024. This important modification should satisfy Republican senators from the 31 states that agreed to expand Medicaid coverage.

Changes in Subsidies, Tax Credits. The House bill replaces Obamacare’s income-based subsidies to help the poor buy insurance on the exchanges with refundable tax credits based on age. Critics argue the House tax credits would make health insurance substantially less affordable since the credit would not increase when premiums increased and there are not additional monies for those in higher-cost areas. The Senate measure uses people’s income, age and geography as the benchmark for helping those without workplace coverage to buy private insurance. The discussion draft also extends Obamacare subsidies down to 0 percent of the FPL which moderates asked for to make sure those cycling off Medicaid expansion would be eligible for the subsidies. However, opponents say the Senate bill could be further improved if it made tax credits more generous, particularly for older patients. The Senate draft set the income threshold at which credits are phased out at 350 percent of the federal poverty level ($42,210), a reduction from the 400 percent of FPL cap in Obamacare and a substantial reduction in general from the $115,000 cap in the House bill (with a gradual phase-out beginning at $75,000).

Modifies Preexisting Condition Provisions. The House bill was criticized for ripping away Obamacare’s protections for people with preexisting conditions. The politics got far ahead of the reality (the House bill includes essential health benefits and community rating), but the House plan did give states the option for applying for waivers from these two provisions if they can show the waivers will lead to lower premiums and broader coverage.  The Senate discussion draft leaves in place the popular ObamaCare market protections like pre-existing condition protections, community ratings and essential health benefits. But the Senate draft also broadens the flexibility available to states under the ACA’s Section 1332 waivers including opting out of essential health benefits. Critics question whether the Section 1332 waivers set a higher barrier for states as compared to the House structure. However, Health and Human Services Secretary Tom Price has assured Senators that he has plenty of administrative flexibility in the 1332 waiver process to accomplish the goals the Republican conference are seeking.

Extends Cost Sharing Reduction (CSR) Subsidy Payments.  The Senate discussion draft would provide money to insurance companies to offset the out-of-pocket costs for millions of lower income individuals through 2019. The “cost-sharing” reductions (which prompted a 2014 lawsuit from the House of Representatives) are available to the approximately 7 million consumers who fall between 100 percent and 250 percent of the poverty line to cover co-pays and deductibles. The House passed bill eliminates the CSR subsidies entirely. The Trump Administration has been threatening to discontinue these payments ($135 billion projected 10 year cost), and some insurance companies have cited uncertainty as a reason they are abandoning some markets and raising premiums.

Establishes a Short-Term Stabilization Fund. The Senate bill appropriates $50 billion over four years to try to stabilize ObamaCare’s exchanges. More specifically, the language seeks to “fund arrangements with health insurance issuers to address coverage and access disruption and respond to urgent healthcare needs within states.” Critics like Senator Rand Paul (R-Ky.) say the stabilization funding is a “new entitlement.” The stabilization money, combined with the continuation of ObamaCare’s cost-sharing reduction subsidies through 2019, have lead some conservatives to say the bill keeps too much of ObamaCare in place.

Creates Association Health Plans. The Senate discussion draft includes a provision that would allow small businesses to purchase large group coverage through associations largely free from state insurance regulation. Insurers could offer coverage regulated as large group coverage to small employers through these association plans, encouraging a Trump campaign promise to allow the sale of insurance across state lines. The House bill did not include these provisions, although the House has passed association health plan legislation in the past. It’s likely this provision will face a point of order challenge to being included in reconciliation since it’s an insurance provision that affects neither government revenue nor outlays.

Contrary to statements that the House bill was dead on arrival in the Senate, the new discussion draft does not rewrite the House bill – it simply modifies some of the more unpopular House provisions.  Leader McConnell has considered how to fix the troublesome parts of the House bill so it will pass the Senate.  He’s accomplished the first goal of tacking the unpopular House provisions, even as the politics surrounding Senate passage remains a challenge.

For Republicans who have made erasing ObamaCare a marquee pledge, failure in the Senate is not an option. And for millions of Americans who will suffer as the ObamaCare markets continue to deteriorate, failure is not an option, either.

Why repealing Obamacare is proving so difficult

“Do not confuse motion and progress. A rocking horse keeps moving but does not make any progress.” Alfred A Montapert

Alfred Montapert’s quote about not confusing motion and progress is an apt description of current House effort to get the failed Obamacare replacement process–one of the most significant setbacks for the Trump Administration–back on track.  The behind-the-scenes negotiations to craft a new version of the House GOP replacement bill have yet to produce progress on a consensus bill.

Republicans are struggling to repeal and replace Obamacare for three primary reasons. First, the stated goal of providing better coverage at a lower cost is exceedingly difficult if not impossible. Second, without Democratic support, Republicans face procedural rules that limit the scope of what can be changed. Finally, the Republican Caucus is not monolithic and deep policy disagreements  among hardliners and moderates have made consensus challenging.

First, President Trump has said he wants to broaden healthcare access and provide better coverage for Americans at a lower cost. But these goals are inconsistent. The Affordable Care Act created new markets for the uninsured – with subsidies for those with moderate incomes to make insurance affordable – and it offered the states money to expand the Medicaid programs. But it’s simply not possible to roll back coverage and not affect healthcare access. Also, it’s equally difficult to improve access or coverage without increasing beneficiary out-of pocket or federal costs. Americans across the political spectrum support health coverage for the uninsured and a legislative push to reduce Obamacare’s substantial costs will ultimately impact beneficiary coverage. This is one of the reasons that curtailing entitlements is politically challenging.

Second, Obamacare repeal faces procedural barriers. Many Republican candidates campaigned on complete repeal of Obamacare. The fact remains that full repeal of Obamacare would take 60 Senate votes to overcome a Democratic filibuster.  To counter Democratic opposition, Republicans can proceed under budget reconciliation procedures that end filibusters with only 51 votes. However, those procedural rules limit provisions to items that directly affect federal revenues or outlays. Under Senate reconciliation rules, various insurance market reforms are prohibited. House conservatives bristled at the idea that key elements of Obamacare were not repealed under Speaker Ryan’s American Health Care Act (AHCA). They could not understand why an unelected Senate Parliamentarian should decide the content of their Obamacare repeal legislation.

The second time around we expect to see a House bill that is much broader in scope, the reconciliation rules be damned. The current House thinking appears to be to repeal portions of the ACA and attempt to lower costs regardless of whether those provisions impact outlays. Under this approach, the House will pass a broader bill and let the Senate figure out the budget procedures.

Third, consensus on how to proceed in the House remains elusive. Several modifications to the Ryan’s AHCA replacement have been discussed. First, conservatives are particularly interested in rolling back Obamacare’s essential health benefit requirements, which they believe dramatically increased health premiums. The White House conceding to repeal the essential health benefits in the AHCA caused problems with Republican moderates. Second, conservatives are pushing for state flexibility on Obamacare’s “community rating” provisions which require insurance companies to charge the same premium price to individuals regardless of health condition.  The new bill likely will give state waivers from ACA insurance if they can show that exemptions would improve coverage and lower costs. However among non-Freedom Caucus Republicans, there’s opposition to changes that would let insurers charge higher premiums to older adults, and many disapprove of cuts to Medicaid for low-income people. Third, moderates had raised concerns about the prior bill replacing the ACA’s subsidy system – created to help low and some middle income families purchase insurance on the state exchanges – with refundable tax credits.

On the advent of President Trump’s Inauguration, we expected a drawn out Obamacare fight between Republicans and Democrats, but not a major fight within the GOP. Obamacare repeal efforts in the House are far from dead. Speaker Ryan reminded participants in a donor event in Florida before Easter that Obamacare repeal and replacements were a major campaign promise made by President Trump and scores of GOP members in last year’s election. But Ryan’s AHCA was criticized for making the individual insurance market even less stable than under Obamacare. And every concession to Republican hardliners created additional problems for moderates, which is one reason Ryan’s AHCA failed to gain traction. Health care changes may slip on the national agenda but will reemerge because the ACA’s problems are not going away. The trick is to craft Obamacare alternatives that prove to be more popular- and that can pass Congress.