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Legislative / Policy Update

Senate Floor. As it does every week, the Senate will vote on various nominations, but it will also do something it hasn’t done in almost a decade – vote to ratify tax treaties between the U.S. and other countries. Action on the treaties has been delayed since Senator Rand Paul (R-Ky.) came to the Senate in 2011 and objected that information-sharing provisions in the treaties could compromise privacy rights of U.S. citizens.

Given Paul’s objections, the treaties couldn’t be passed by unanimous consent as they had been in the past, and Senate leaders chose not to spend floor time on the measures. Majority Leader Mitch McConnell has now decided it’s time to move forward, with the Senate set to vote on treaties with Japan, Luxembourg, Spain, and Switzerland. A two-thirds majority is necessary for ratification.

House Floor. On Monday, the House will consider 14 non-controversial bills under suspension of the rules. On Tuesday, there will be a much more controversial vote as the House takes up a resolution to find Attorney General William Barr and Commerce Secretary Wilbur Ross in contempt of Congress for, among other things, refusing to provide documents requested by a House committee. Also on the agenda for Tuesday is passage of legislation to reauthorize federal intelligence programs.

On Wednesday, the House will vote on eight more bills under suspension of the rules, including a bill that would repeal the so-called Cadillac tax that was designed to help offset the cost of the Affordable Care Act. The tax, which would be imposed at a 40% rate on employer-sponsored insurance plans that cost more than a set amount, was supposed to take effect in 2018 but has been repeatedly delayed by Congress, most recently until 2022. While repealing the tax could have a price tag of as much as $190 billion over 10 years, the bill would not have to be paid for in the House if it is passed under suspension, which also suspends the House pay-go rule. All bills approved under suspension require a two-thirds majority.

On Thursday, the House will take up another controversial bill, expected to pass along mostly party lines – legislation to gradually increase the federal minimum wage from $7.25 an hour to $15 by 2025, with inflation adjustments thereafter.

Debt Limit. Even though raising the debt limit is an action necessary for the government to pay the bills it has already incurred and is not an action that increases the nation’s debt, many lawmakers are reluctant to vote for debt limit increases. The optics of this action were particularly troublesome in 2011, when the debt limit was $14.3 trillion and needed to be raised by approximately $2 trillion if lawmakers were to avoid another debt limit vote until after the 2012 elections.

The Republican-controlled House demanded a commensurate amount of deficit reduction in return for their votes to raise the debt limit. To oversimplify, President Obama and the Democratic-controlled Senate went along with the plan and agreed to raise the debt ceiling by about $2 trillion and to reduce the deficit by about $2 trillion over the next 10 years, which is how we got the budget caps for defense and non-defense discretionary spending.

When the debt ceiling needed to be raised again in 2013, someone figured out a new way to address the problem – suspend the debt limit to a certain date rather than raise it by a specific amount. Ever since, Congress has avoided headlines proclaiming that lawmakers have increased the debt limit by, say, $2 trillion.

The most recent suspension was part of the February 2018 legislation that raised the budget caps for two years and suspended the debt limit through March 1, 2019. When the suspension lapsed in March, the debt limit was reset at $21.9 trillion and the Treasury Department began using “extraordinary measures” to meet federal obligations.

With Treasury Secretary Steven Mnuchin and the Bipartisan Policy Center now warning that action on the debt limit could be needed in early September, House Speaker Nancy Pelosi and Secretary Mnuchin have stepped up their efforts to try to reach an agreement before the August recess.

Budget Caps / Appropriations. House and Senate leaders from both sides of the aisle believe that the best outcome of negotiations with the White House would be a debt ceiling agreement that also raises the budget caps for FY 2020 and 2021. If a long-term agreement on the debt limit and the spending caps can’t be finalized before the August recess, a fallback option would be passage of legislation that provides for a short-term suspension of the debt limit until, for example, the end of September.

Once a deal on the spending caps is made, it will then take time for appropriators to finalize all of the FY 2020 appropriations bills. In a similar situation in 2018, it took six weeks to put together an omnibus appropriations package after new caps were set. The caps deal was announced on Feb. 7, approved by both houses on Feb. 9, and signed into law the same day. The measure also included a continuing resolution to fund the government through March 23. On March 21, appropriators posted an omnibus bill that conformed to the new caps. After quick approval by the House and Senate, the bill was signed into law on March 23.

While it’s possible that appropriators could move with similar speed this year, the biggest hurdle to passing all 12 appropriations bills in an omnibus is an issue that was not present in 2018 — funding for a border wall.

U.S.-Mexico-Canada Agreement. The House Democrats’ Working Group for the USMCA held its second meeting with U.S. Trade Representative Robert Lighthizer last Thursday, July 11, focused on labor concerns. The first meeting, on June 25, centered on concerns with the data exclusivity period for biologic drugs and drug prices.

At the end of this week, Ways and Means Trade Subcommittee Chairman Earl Blumenauer is leading a bipartisan Congressional delegation, including most members of the Working Group, to Mexico. The delegation is expected to have a full day of meetings in Mexico City on Friday, July 19, and then will conduct site visits throughout Mexico over the weekend.

Democrats seem to have ruled out the possibility of Congressional consideration of USMCA legislation before the August recess and are pointing to the fall months as a possibility for action. While the Administration would like to move as fast as possible, there is an understanding that if Democrats are to support the legislation, there first has to be buy-in from Speaker Pelosi.

Committee Action of Note:

July 16

  • Senate Energy and Natural Resources Committee markup of various bills, including the Nuclear Energy Leadership Act.
  • Senate Banking Committee hearing on “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations.”
  • House Committee on Transportation and Infrastructure Subcommittee on Highways and Transit hearing: “Oversight of the Federal Transit Administration’s Implementation of the Capital Investment Grant Program.”

July 17

  • Senate Homeland Security Committee hearing: “Roundtable- Unprecedented Migration at the U.S. Southern Border: Bipartisan Policy Recommendations from the Homeland Security Advisory Council.”
  • House Agriculture Subcommittee on Biotechnology, Horticulture, and Research hearing: “Assessing the Effectiveness of the Organic Program.”
  • House Committee on Transportation and Infrastructure Subcommittee on Aviation hearing on “The State of Aviation Safety.”
  • House Financial Services Committee hearing: “Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System.”
  • House Science Subcommittee on Energy hearing: “The Future of Electricity Delivery: Modernizing and Securing our Nation's Electricity Grid.”

July 18

  • Senate Banking Committee hearing: “Export Control Reform Implementation- Outside Perspectives.”
  • Senate Agriculture Committee hearing: “Agricultural Research and 2018 Farm Bill Implementation.”

Political Update

2020 War Chests. President Trump and the Republican National Committee raised a combined $108 million in the second quarter, with $123.7 million already in the bank. The top five fundraising leaders among Democratic presidential candidates collected nearly $100 million during the second quarter. South Bend Mayor Buttigieg led the way with $24.8 million, followed by former Vice President Biden with $21.5 million, Senator Warren with $19.1 million, Senator Sanders with $18 million, and Senator Harris with $12 million. For small dollar donations, ActBlue, an online fundraising platform for Democratic candidates and groups, announced that on June 30, the last day of fundraising for the quarter, it processed 400,000 individual contributions, and for the month of June processed $100 million in donations.

2020 Democratic Nomination. The candidate field sits at 24 as billionaire Tom Steyer announced his candidacy and California Rep. Eric Swalwell dropped out of the race. Steyer, who has led an impeachment campaign against President Trump for over two years, has said he will focus on the environment while self-funding his campaign.

Way Too Early Polling. A new NBC/Wall Street Journal poll has the President trailing former Vice President Biden by 9 points, Senator Sanders by 7 points, Senator Warren by 5 points, and Senator Harris by 1 point.

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