Quick Hits - What it Means
Wishing you a Happy Holiday and a joyful New Year from Capitol Integration!Read more
We are now operating the government on a Continuing Resolution (CR) that will take us seven months into FY17. Unlike a simple date extension CR’s of late, this CR ran 70-plus pages with numerous “anomalies.” The CR passed the House 326-96; passed the Senate 92-7.
Part of the reason the CR passed with relative ease is the knowledge that a significant supplemental appropriation will come forward early in 2017 – it could be as big as $10B before the dust settles.
The FY18 budget, typically due from the President to Congress the first Monday of February, likely won’t get to Congress before April. Agency inputs to the FY18 budget have been complete for some time, albeit without the final touches of a new administration.
National Defense Authorization Act (NDAA)
Passed the Senate with ease and moved to President Obama’s desk this week. Of particular note, the bill elevates US Cyber Command to Combatant Commander status, making it the 13th Major Combatant Command in the Unified Command Plan. Additionally, substantial acquisition reforms, too many to detail here, represent some of the most significant legislative policy prescriptions for DoD in decades.
Contrary to the media headlines of ExIm being a corporate welfare program, several small-to-medium-sized businesses indicate that ExIm affords their international customers access to funding that is not always available overseas. The CR mentioned above failed to include a provision that would restore the Export-Import Bank’s financing authority.
National Defense Authorization Act (NDAA)
On Friday the House passed the $619B NDAA by a vote of 375-34. The bill will move to the Senate this week, where it is expected to receive similarly strong support and easy passage. The bill reflects a compromise of the House and Senate versions passed out of committee earlier this year. The compromise provides for $9B in overseas contingency funding (OCO) versus the $18B in the original House version of the bill. The $9B in OCO directs $3.2B for readiness shortfalls in the base budget, and $5.8B for troops in Afghanistan and operations in Syria. See the text of the NDAA here.
See the HASC summary of the bill here.
Despite the relatively good news of agreement and compromise on the NDAA, appropriations will take months longer than previously anticipated. This week Speaker Ryan and Leader McConnell agreed to the incoming administration’s request to extend the continuing resolution (CR) into March, and possibly April. The time is expected to give the Trump team an opportunity to put its stamp on any funding agreement, while also allowing the Senate time to process the myriad confirmation hearings required in order to seat a new cabinet.
Fourth Annual Reagan National Defense Forum
- Generally very positive impressions of the defense spending outlook in the Trump administration with some caveats:
- As a practical matter, increases in defense spending and relief or repeal of sequestration, non-defense elements of government will have to receive some relief as well, although not necessarily equal relief
- Despite Republican control of the House and Senate, Democrats in the Senate can impose the 60 vote threshold and prevent passage of funding legislation – Republicans won’t be able to just force everything through
- The nomination of General Mattis is universally appealing to the defense industry and Congressional defense leadership.
- Senator Gillibrand (D-NY), a member of the Senate Armed Services Committee, has indicated she will not support the required legislative waiver for General Mattis to serve in this civilian role less than 7 years since his departure from active duty. The waiver legislation, supported by Chairman McCain and many others, may be a test case to see how difficult Senate Democrats will make the confirmation process for the Trump administration. Senator Gillibrand’s resistance can force a 60 vote requirement in the Senate, or we could see her use the leverage to force the Senate to revisit her previously failed legislation requiring changes to the pentagon’s handling of sexual assault cases. Look for the latter at this point.
- A supplemental funding request of between $6B and $9B is imminent. It is generally viewed as a welcome relief valve softening the impact of the CR. This supplemental will likely be passed soon after the new Congress forms in January.
See the recently published calendars of the new 115th Congress below.
The House and Senate returned from the election break to get back to work for the first time in the new political atmosphere Both chambers remain in Republican control, giving President-elect Trump a unified government for the first two years of his term – a scenario few would have predicted going into the election.
House Republicans re-elected their existing leadership team, retaining Paul Ryan (R-WI) as the Speaker of the House. House Democrats delayed their leadership elections amid loud opposition from younger members demanding recognition from more senior members. The top three House Democrats are 76, 77 and 76 years old, respectively. Rep. Tim Ryan (D-Ohio) announced on Thursday that he will challenge Leader Pelosi. Pelosi, however, has expressed confidence in her victory over a challenger.
Senate Republicans re-elected their existing leadership team as well, retaining Mitch McConnell (R-KY) as majority leader. Senate Democrats quickly elected Chuck Schumer (D-NY) as their leader, while simultaneously elevating four additional Senators to the Democratic leadership team. There are now TEN members on the leadership team, a nod to the diverse views of the party.
Congress had been expected to complete the FY17 spending bills in an omnibus appropriation before Christmas. As of Wednesday, the signal from President-elect Trump, delivered to Speaker Ryan by Vice President-elect Pence, was to do a short term Continuing Resolution into March 2017. In theory, this prevents a fight with Democrats over spending levels before the end of this Congress. While a CR is never a good solution, the Trump team and Republicans generally believe better outcomes can be agreed upon in the new Congress. This is not the solution Leader McConnell supported in the Senate, but the Senate has recognized demonstrating unity with the Trump administration will be a good start.
There are many repercussions of delayed FY17 funding. This will be a more complicated CR than just a single page change of date for expiration of funds. Several programs require special consideration and will be addressed as “anomalies” to the CR.
The National Defense Authorization Act (NDAA) for FY17 is nearly completed and will likely be ready to move to the President’s desk by early December. Relatively minor details remain, but big issues such as topline and OCO spending have been agreed. A compromise to add $9B above President Obama’s FY17 defense budget request, effectively split the difference between Senate and House proposals.
The House Republican caucus had clearly aligned enough votes to restore a newly formulated plan to allow a return to some level of Congressionally directed spending. Many lawmakers remain frustrated with surrendering their constitutionally derived authority to control federal spending to the Executive Branch. Speaker Ryan prevented the vote from taking place, strongly suggesting that this was not the time to vote on the issue. Look for earmarks to continue working their way back into the process as a new Congress, with renewed vigor, establishes its footing alongside a new Republican President.
FY18 Budget Outlook
A new budget is traditionally delivered from the President to Congress on the first Monday of February. Often this target date is missed in the first year of a new Presidency. It is anticipated that the FY18 budget will not be ready for delivery to Congress before early April 2017. This should allow sufficient time for a Trump administration to put some imprint on the input, as well as to be informed by any decisions of the FY17 CR.
Early indications suggest that sequestration will be quickly repealed in the new Congress. Ideally this should restore a sense of continuity in planning across government. Further, indications abound suggesting a near-term increase in national security spending across a variety of key programs.
Throughout the week on Capitol Hill, in both House and Senate offices, one could sense that change is clearly afoot. When there is change in Congress, there is opportunity, good and bad. Staying engaged in the process, thinking long-term about objectives and accepting the new realities are all part of doing business in Washington, DC.Read more
One of the most scrutinized election seasons in American political history finally concluded last night, and its immediate implications for upcoming legislation and policy direction cannot be understated. The political establishment has been put on notice that long-simmering issues such as immigration policy, the national debt, trade, size-of-government, and wage disparity, to name a few, must be addressed in a different and more urgent manner. Few recognized the depth and breadth of unrest within the electorate.
Of note, as relates to doing business with the US government customer, the process by which funds flow to departments and agencies remains the same.Knowing how, when and where to address needs, requirements, resourcing, budgets, appropriations and contracting remains unchanged by the election results.
Despite losing some seats, Republicans have maintained their majority in the House. The challenge in the coming legislative days for Speaker Paul Ryan will be to ensure that there is, in fact, a governing majority that can pass legislation. With a highly charged freedom caucus still firmly in place on the right, achieving the necessary 218 votes to pass legislation will routinely require significant Democratic support. Overall, expect to see a continued trend of difficult votes and special procedural maneuvers used on each side to achieve certain gains.
Control of the Senate remained in question until the final moments of this election cycle. Similarly to the presidential race, there were several key contests that made the race especially interesting: New Hampshire, Pennsylvania, Missouri, North Carolina and Florida.The razor thin margin by which Republicans have maintained control (51 – 47, with Louisiana holding a run-off on December 10th and New Hampshire Democrat Hassan leading at the time of this post) will assure that new policies will not simply be steam-rolled through Congress. In recent years, while in the minority, Democrats have successfully stalled or prevented passage of bills on demand. Working through this complex dynamic will require significant political skill.
The Lame Duck Session
Congress will return to the Hill on November 14th with a difficult laundry list facing them. Look for appropriations issues to dominate the headlines well into December.
To date, the VA/MilCon appropriation is only one of 12 FY17 spending bills to be enacted – it provided the legislative vehicle for the Continuing Resolution (CR). The CR will expire on December 9th, putting pressure on the remaining bills. With 11 appropriations bills left to complete in just 16 scheduled legislative days, an omnibus appropriations bill that rolls multiple spending bills into one is the most likely outcome. Recall that Speaker Ryan ran for his Speakership on a platform that vowed to avoid such giant spending deals because of their typically unclear final negotiations.
Further complicating the budget dialogue is the Department of Defense and its role in the process thus far. The DoD has raised the specter of requesting a much larger “supplemental” appropriation in addition to the present FY17 bills under consideration. Many had expected a request of approximately $3 billion to forward in March 2017. The DoD has recently signaled a request closer to $6 billion, and has pushed up the timeline to before March. They have sent mixed signals as to exactly what needs this supplemental funding would address. DoD Comptroller Mike McCord says that need is $6 billion, whereas Secretary of Defense Carter contradicts his subordinate by suggesting the final figure is “not settled.” Chairman McCain says any supplemental funding shouldn’t be allocated solely for war funding, but must be used for the “total force” in order to address readiness and personal needs in addition to the foundational costs. This debate within the debate will significantly impact the passage of the FY17 omnibus.
Justice Against Sponsors of Terrorism (JASTA)
The bill previously passed both chambers with ease but was subsequently met with a veto from President Obama. It survived a swift veto override vote, the first delivered to President Obama. The popularity of the provisions allowing survivors of 9/11 to pursue justice carried the day. Now that we recognize some unintended consequences of the original bill, look for Congress to quietly insert some revisions to the bill into a lame duck legislative vehicle – this will likely be in the omnibus. Look for broader review of JASTA in the new Congress in January.
Supreme Court Nominee
The nomination of President Obama’s choice for the Supreme Court to replace the late Justice Scalia, Merrick Garland, will likely die and simply not be taken up before the 114th Congress concludes. . Look for President Trump to select a Supreme Court candidate from his previously released list of potential candidates.
Presidential Transition and Change of Government
President-elect Trump will make over 4,000 appointments to government positions, of which more than 1,000 will require Senate confirmation. This process of filling executive vacancies will take several months.
Future Quick Hits will address the new administration and the ongoing dynamic!
In the eleventh hour before breaking for the election recess, both chambers approved legislation to fund the government through December 9th and address key issues that had stalled its earlier passage.
Wednesday afternoon the Senate passed its stopgap funding measure with a 72-26 vote; the bill would include a prominent $1.1 billion towards combating Zika as well as $500 million to states suffering from natural disasters, along with its primary function of funding the government and avoiding shutdown. Initially met with resistance from House Democrats, a bipartisan Water Resources Development Act (WRDA) pushed the bill forward.
On Wednesday evening the House passed the aforementioned WRDA to address the crisis in Flint, Michigan with federal funding that will go towards drinking water infrastructure and aid. The bill passed overwhelmingly with a 399-25 vote, after an added amendment detailing $170 million in aid passed 284-141. The House version differs from the Senate version, in that the House version authorizes the spending and the Senate is looking to appropriate funding. The House WRDA will be part of a much larger conference for the Senate’s package that includes Army Corps of Engineers projects, transportation and environmental restoration provisions. Look for this conference to happen when Congress returns after the election, as well as further discussion on the specifics of the Flint crisis.
The WRDA significantly opened the way for an agreement to clear the impasse between the two chambers after clever work from House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and Minority Leader Nancy Pelosi. The final bill passed with a 72-26 vote from the Senate and 342-85 in the House.
The quick and decisive movement of this bill is coming directly following both chambers’ vote to override the president’s veto of the Saudi Arabia bill, which allows for families of 9/11 victims to sue Saudi Arabia.
Senators and Representatives, having tied up all loose ends last night, will now make their way back to the campaign trail to focus on elections, and will return to the Hill during the lame-duck session in November after the election.
The Senate voted overwhelming on cloture (decision to limit further debate to 30 hours) on the motion to proceed for the “shell” of a continuing resolution to fund the government through December 9th.
The vote was an overwhelming 89-7, easily surpassing the required 60-vote threshold to avoid filibuster. While the bill could still meet opposition later on, this move suggests at last the contours of a short-term spending agreement.
As with all CR actions, businesses with federal contracts should make the extra effort to assure their federal customer understands any special circumstances associated with he contract’s funding mechanisms.
Some of the most prominent issues at stake in the bill are transportation, campaign finance and Internet domain rights. The majority of discussion and debate, however, has centered on the bill’s provision for Zika funding (around $1.1 billion). The bill moved through after Senators removed language that would block Planned Parenthood’s partner clinic in Puerto Rico from accessing federal grants, considered a win for Democrats. It is looking more and more likely that the bill will not include relief funding for the contamination crisis in Flint, Michigan or for the flooding in Louisiana. Expect debates on these riders to continue this week, and potentially be revisited during the post-election lame duck session.
Also, late yesterday, Leader McConnell signaled to expect a Senate vote to override a threatened presidential veto on recently passed legislation allowing families of 9/11 victims to sue Saudi Arabia. The President has until Friday to veto the bill. An override vote would take place next week.
As the Labor Day weekend came to a close, both chambers returned to Capitol Hill to proceed with legislative deliberation for FY17. With the end of the fiscal year quickly approaching, Congress must come to an agreement on the conclusion of appropriations bills. Among the most significant, in both size and breadth, is the Defense Appropriations bill.
What is the status of the defense bills?
Before the recess, the Senate defense appropriations bill was unable to proceed to floor action as Democrats raised concerns about spending levels. Hoping to avoid a government shutdown, Senate Majority Leader Mitch McConnell has signaled he will advance a short-term continuing resolution (CR) to fund the government through December 9th. The CR would also allow more time for the Senate to solidify a position on Zika funding. While House Republicans have yet to publicly reveal their intentions, they will meet behind closed doors on Friday to discuss the newly presented option. Some more conservative House GOP members have even suggested a CR that pushes the timeline into next year, perhaps into March 2017. As of this writing, it is unlikely a CR would extend that long.
As partisan differences continue to create obstacles for the legislative process, this week thePentagon attempted to speed up the process by undercutting the House GOP’s budget plans, led by House Speaker Paul Ryan. The strategy attempts to pit both chambers against each other using pressure from top military officials to underline how the GOP’s budget is hurting national defense. The plan, while bold, is not wholly unexpected; Defense Secretary Carter has been vocal about his opposition to the $18 billion funds taken from a war purse (the OCO account) in a time of war. The most likely outcome at this stage is an omnibus appropriation after the election.
The NDAA, which was left in staff conferencing before the recess, is not likely to complete conference before the fiscal year-end and the election break at the end of September. The House and Senate positions on topline funding remain too far apart. Other issues like increased troop strength, increasing wages and hardware acquisition are challenging, but are likely to be resolved. Look for high-profile meetings of Armed Services Chairmen McCain and Thornberry throughout September to keep political heat on the process.
The majority in the Senate hangs in the balance by a few very competitive seats this November. The “top” of the ticket can influence several specific races.
The top five most competitive races with incumbent Republicans to watch heading into November:
Florida: Rep. Patrick Murphy (D) (top) is challenging Republican incumbent Senator Marco Rubio (bottom).
Illinois: Rep. Tammy Duckworth (D) (top) is challenging Republican incumbent Senator Mark Kirk (bottom).
New Hampshire: Governor Maggie Hassan (D) (top) is challenging Republican incumbent Senator Kelly Ayotte (bottom).
Pennsylvania: Katie McGinty (former Environmental Advisor to Vice President Al Gore and Bill Clinton and former Chief of Staff to PA Governor Tom Wolf) (top) is challenging Republican incumbent Senator Pat Toomey (bottom).
North Carolina: Deborah Ross (former Member of North Carolina House of Representatives and attorney) (top) is challenging Republican incumbent Senator Richard Burr (bottom).
The calm before the presidential election storm has begun as the confetti finally settled and both parties’ conventions came to a close last week. With Congress in recess and both presidential nominations firmly in place, now is the perfect opportunity to do a brief recap of where the year has taken us thus far and where we see the legislative path turning in the coming months.
Several events have conspired to bring the legislative process to an effective standstill: the extended Congressional recess through Labor Day; limited scheduled legislative days remaining (21); and, the election quickly approaching in November. It is highly unlikely that any appropriations bill will get to the President’s desk before the election.
What has happened in 2016 so far?
- Commerce/Justice/Science – committee approved 30-0 (4/21/16)
- Energy/Water – initial Senate passage 90-8 (5/12/16)
- Agriculture – committee approved 30-0 (5/19/16)
- Legislative Branch – committee approved 30-0 (5/19/16)
- VA/MILCON – initial Senate passage 89-8 (5/19/16)
- Transportation HUD – initial Senate passage 89-8 (5/19/16)
- Homeland Security – committee approved 30-0 (5/26/16)
- Labor HHS – committee approved 29-1 (6/9/16)
- Interior-Environment – committee approved 16-14 (6/16/16)
- Financial Services – committee approved 30-0 (6/16/16)
- State-Foreign Operations – committee approved 30-0 (6/29/16)
- Military Construction, Veterans Affairs, and Related Agencies subcommittee was resolving differences on its appropriations bill before the break
- Agriculture 5054 – committee approval voice vote (4/19/16)
- Legislative Branch – initial House passage 295-129 (5/19/16)
- Agriculture 5393 – committee approval voice vote (5/24/16)
- State-Foreign Operations – committee approval voice vote (5/24/16)
- Labor/HHS/Education – initial House passage 233-175 (6/10/16)
- Commerce/Justice/Science – initial House passage 282-138 (6/16/16)
- Financial Services – committee approval voice vote (6/22/16)
- Energy/Water – initial House passage 239-185 (7/7/16)
- VA/MILCON – committee approval voice vote (7/12/16)
- Homeland Security – initial House passage 231-196 (7/14/16)
- Interior-Environment – committee approval 31-19 (7/14/16)
Defense bills recap…
Going hand in hand with the NDAA are the appropriations bills coming out of the SAC-D and the HAC-D, which would provide the funding for the provisions, detailed in the NDAA. While the House bill has moved along without a hitch, the Senate version has encountered more obstacles; Senate Democrats have prevented it from moving to a floor vote. The bill failed to proceed after a 55-42 vote two weeks ago. SAC Chairman Thad Cochran (R-Miss) commented, “The Senate has a responsibility to give our men and women in uniform the resources they need to defend our nation. We do so in this bipartisan bill. Filibustering its consideration causes uncertainties that endanger our national security…” Senate Democrats are resisting what they see as extremely partisan provisions in the appropriations bill, holding up its progress. The Senate leaders must be able to persuade votes after the recess if the bill is to survive. This standstill will very likely lead to an omnibus bill before the year is up in order to avoid a government shut down.
Longer term (early 2017), look for a smaller (less than $10B) additional Overseas Contingency Operations (OCO) supplemental appropriation.
What Does It Mean…
A continuing resolution (CR) to fund the government through the end of the calendar year is increasingly likely as the appropriations process grinds to a standstill. As it stands, the House and Senate only have this week left to work on legislation before breaking for the summer to focus on campaigns and the party conventions. Once Congress returns, there will only be 21 legislative days before the election in which to finish all the remaining bills. To date, the House has passed 6 of 12 individual appropriations bills; the Senate has only passed 3 of the 12 required spending bills. Open talk of an Omnibus appropriation, rolling all 12 bills into one Trillion-plus-dollar spending bill, may already be heard on the Hill.
Last Week Before Extended Summer Recess…
Legislative business in the House and Senate resumes today, ringing the last week before a long summer recess until after Labor Day in September.
At the end of last week, the House moved forward in a procedural vote to move the National Defense Authorization Act to conference.
Speaker Paul Ryan approved the NDAA progress, saying:
“This legislation gives our military the tools and funding it needs to do its job and keep Americans safe. It also gives our men and women in uniform a well-deserved raise. If there’s anyone who deserves an increase in pay, it’s those who risk their lives every day for the safety of this country. “
The conferees, named by Speaker Ryan last Friday, will meet in a conference committee to discuss a final, combined version of the NDAA bill this Wednesday. Staff-level conferencing is has already begun. Committee leaders of SASC and HASC acknowledge the bill will not complete conference before the Summer recess.
The House also continued moving forward on individual appropriations bills with the Labor/HHS moving out of subcommittee by voice vote and the Financial Services appropriations bill clearing the House floor by a largely partisan vote of 239-185.
The Senate experienced another flare up last week when Senate Democrats voted down a motion to proceed to debate on the Senate Defense Appropriations Bill. Lingering controversy over the maneuver to transfer OCO money to the base budget in the House version of the bill, and continued frustration over a lack of funding for the Zika virus, prompted Democrats to vote down the measure. This move effectively stalls the appropriations process in the Senate for the moment.Read more