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Here’s one last “round-up” before the new year. We hope everyone has a restful holiday and we look forward to seeing you in 2020.

Legislative / Policy Update

They’re gone. Lawmakers wrapped up their legislative business yesterday and have left for the rest of the year. The House will return on Jan. 7, and the Senate’s first votes will be Jan. 6. There will be several pro forma Senate sessions between now and Jan. 3, when the Senate convenes at noon for the second session of the 116th Congress. When Senators reconvene, they will add a new member to the Finance Committee. Senator Ben Sasse (R-Neb.) will take the committee seat of Senator Johnny Isakson (R-Ga.), who is retiring at the end of 2019. Also of note is that House Speaker Nancy Pelosi today invited President Trump to deliver his State of the Union address on Feb. 4.

Before adjourning, Congress sent the President legislation several pieces of major legislation, including bills to fund the government in FY 2020, to implement the U.S.-Mexico-Canada Agreement, and to reauthorize national defense programs.

FY 2020 Appropriations. Rather than send the President one large omnibus appropriations bill, lawmakers divided the 12 FY 2020 spending bills into two packages. Four bills were wrapped up into H.R. 1158 – Defense, Homeland Security, Financial Services, and Commerce-Justice Science. The remaining eight were in H.R. 1865.

On Tuesday, Dec. 17, the House voted 297-120 to approve H.R. 1865 and 280-138 to pass H.R. 1158. The Senate followed on Thursday, Dec. 19, with votes of 71-23 on H.R. 1865 and 81-11 on H.R. 1158. The President plans to sign the bills today.

H.R. 1865 was also the vehicle for a wide range of provisions that:

  • Extend tax breaks that expired in 2017 and 2018 and will expire at the end of this year. Most of the tax benefits are extended through Dec. 31, 2020, with the exception of two credits that will be in effect through 2022 – the biodiesel tax credit championed by Senate Finance Chairman Chuck Grassley (R-Iowa) and a tax break for short-line railroads. The measure also extends and increases the credits for wind energy production projects undertaken in 2020.
  • Repeal three Obamacare taxes – the 40% Cadillac tax on certain employer-provided health plans (Congress has previously delayed the tax until 2022); the 2.3% tax on medical devices set to take effect Jan. 1; and a tax imposed on the health insurance industry.
  • Reauthorize the Export-Import Bank and the Terrorism Risk Insurance Program for seven years.
  • Extend the National Flood Insurance Program through Sept. 30, 2020.
  • Shore up retirement funds for coal miners.
  • Raise the legal age to purchase tobacco to 21.
  • Help workers save for retirement (the SECURE Act). The measure encourages small businesses to band together to offer retirement plans, enables part-time workers to participate in 401(k) plans, raises the required distribution age for retirement accounts from 70½ to 72, and repeals the rule that prohibited contributions to a traditional IRA by taxpayers age 70½ and older.

The final package did not include any technical corrections to the Tax Cuts and Jobs Act. This means there was no fix this year for what is known as “the retail glitch,” a drafting error that prevents retailers, restaurants, and other businesses that improve their facilities from immediately writing off the costs of those improvements. Instead, the expenses have to be written off over 39 years. Look for discussions to continue next year as House Ways and Means Chairman Richard Neal (D-Mass.) has said that “before you do any technical corrections bills, refundables will be the price,” referring to Democratic efforts to expand two refundable benefits – the Earned Income Tax Credit and the Child Tax Credit.

USMCA. On Thursday, Dec. 19, the House voted 385-41 to approve legislation implementing the U.S.-Mexico-Canada Agreement. The Senate plans to take up the bill after the impeachment trial is concluded. The Mexican Senate on Dec. 12 approved modifications to the agreement, and Canada will vote in late January or February. Once all three countries have approved the deal, the President will send a notice to Congress. The agreement cannot enter into force until at least 30 days after the President sends the notice to Congress. The notice will include the date that the USMCA will enter into force.

NDAA. The Senate voted 86-8 on Dec. 17 to approve the National Defense Authorization Act, following House approval on Dec. 12. The measure now goes to the President. In addition to setting defense policy for FY 2020, the measure creates a Space Force and provides government workers with 12 weeks of paid parental leave.

Impeachment Resolution. On Wednesday, Dec. 18, the House approved two articles of impeachment. On the first article, abuse of power, the vote was 230-197. On the second charge, obstruction of Congress, the vote was 229-198. House Speaker Nancy Pelosi said Thursday that she would hold off sending the articles of impeachment to the Senate until Majority Leader Mitch McConnell works out rules for the trial with Minority Leader Chuck Schumer.

While there is precedent for the Republican and Democratic leaders reaching an agreement for impeachment rules, only 51 votes are needed to approve the rules. McConnell could therefore craft rules without Schumer’s buy-in. However, with just a 53-47 majority, he could lose only two Senators if all 47 Democrats vote against the rules. If three Republican Senators opposed the rules, putting the count at 50-50, Vice President Pence could not break the tie as Supreme Court Chief Justice would be presiding over the trial, not the Vice President.

Political Update

N.C. House Seats. Two Republican lawmakers from North Carolina, Reps. Mark Meadows and Mark Walker, announced this week they would not run for re-election in 2020. Meadows represents a reliably Republican district, but Walker’s district was re-drawn by the state legislature and is now much more Democratic. Walker said he is considering a run for the Senate in 2022, when GOP Senator Richard Burr retires.

2019 Look Back. Since the 2018 elections, 41 House members – 30 Republicans and 11 Democrats, and four Senators – three Republicans and one Democrat, have left their seats, announced they will not be running for re-election, or have died in office. For those sticking around or hoping to move to a seat of higher power it has been a big year for fundraising. Democrats running for the House raised $240,421,330 compared to their Republicans counterparts’ $200,249,839. On the other hand, Republicans running for Senate fared better than their Democratic colleagues by raising $129,161,819 versus $118,756,192 for the Democrats.

2020 Look Ahead. Next year there will be special elections to fill three House seats (Reps. Hill, Cummings, and Duffy) and two Senate seats (the unexpired terms of Senators McCain and Isakson). Two other special elections are expected to be added to the calendar to fill the seats of Reps. Collins (N.Y.) and Hunter. On the Democratic presidential front, the first votes to be cast will be Feb. 3 in the Iowa caucuses. Democrats will formally nominate their candidate at the convention in Milwaukee the week of July 13, while Republicans will head to their convention a week later in Charlotte, N.C.

Across The Pond. Boris Johnson’s new U.K. Parliament approved the Prime Minister’s Brexit deal today by a vote of 358-234, showcasing the value of the 47 seats the Conservatives picked up in last week’s election. The vote puts the U.K. on course to leave the European Union on Jan. 31, 2020. It will also lock in a one-year transition period for the U.K. leaving the EU, where it will still be subject to many of the EU’s rules, but will be able to begin to sort out new trade deals and relationships.

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