'17 Budget: Law & Regular Order (Apr. 11)

Mike & Co. –

With both Houses back in session, the Hill is alive with the sound of hearings.  Of the many hearings of note this week (ten of which are listed at the end of the update), the most timely is on Wednesday, when Senate Budget Chair Mike Enzi holds the second in a series of hearings focused on fixing the broken budget process.

On the same day, the Republican Study Committee is to unveil its alternative to the Obama FY17 budget.  It would be seen as a blueprint for the GOP a national fiscal policy but these are not ordinary times for the Party.   How will the FY17 budget play out the Hill?   See below.

Best,

Dana

 

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A Conservative Showcase

The Republican Study Committee budget expected on Wednesday is said to be a “greatest hits” list of the most conservative budget proposals set forth in recent years.  Highlights include:

• a cut of $8.6 trillion over 10 year, net; over $2 trillion more than the leadership-backed budget.  The RSCP plan also comes into balance after eight years, rather than the ten years in the leadership proposal

• abolition of the IRS (a Ted Cruz favorite)  — the plan sets up a new agency within the Treasury Department, where the IRS resides)

• cap of income taxes at 25 percent

• shifting the US to a territorial system — a long-time sweetheart for conservative international tax reform plans, a territorial plan forgoes taxing foreign-earned income of US businesses

• repeal of Dodd-Frank, the Affordable Care Act, and the EPA’s Clean Power plan

• reduction of capital gains rates — the proposed rate has not yet been release

The Study Committee plan would scrap the Obama-Boehner deal that caps 2016 discretionary spending at $1.07 trillion.  RSC Chairman Bill Flores told the Heritage Foundation on Sunday: “I can tell you this: our leadership doesn’t see a clear path forward at 1070 or at 1040 [billion dollars] … I see a path forward at 1040. My goal is to try to convince our leadership to move forward at 1040.”

Budget or a Campaign Platform?

The sheer differences between the budgets set forward by Paul Ryan et al. and the Study Committee demonstrate the gulf that has appeared between GOP leadership and their right flank.

An RSC budget that reads like a Freedom Caucus wish list shouldn’t be surprising.

The Freedom Caucus has been giving Ryan grief for months over the Speaker’s budget, and now the RSC has joined in on the squabbling – the RSC has long been a herald of the more conservative GOP wing, but it also counts the majority of Republicans in its membership.

Budget Process Reform

The House Rules Committee will hold a  hearing on Thursday on proposed rules changes surrounding the authorization and appropriations process.  Speaker Paul Ryan has expressed interest in overseeing a rules reform program since taking on the Speakership and may try to use the process as an opening to encourage cooperation from the Freedom Caucus on the budget process.

Appropriations Acts

Senate Appropriations ranking member   Mikulski said last week that Appropriations would release spending subcommittee allocations on Thursday.

In the meantime those subcommittees are working with provisional numbers, and seem to be poised to act quickly once things firm up.

GOP Sen.  Alexander said “it will be a little harder” to advance appropriations bills amid tight budget constraints, “but the advantage is we know the amount of money we have to spend. We’ve already agreed on it. It should be the best appropriations year we’ve had in seven or eight years.”

Comity or After-You in the Senate?

Despite the bitter arguing over the budget in the House, the Senate may be ripe for broad bipartisan budget reform in 2016.  Budget Chair Enzi is set to unveil a budget overhaul as soon as May, saying  today that he would like to put out a bill shortly after the end of his committee’s hearings on the matter.

Notable Democrats who have been included in the talks are Sens. Warner, Kaine, and Whitehouse, while Independent Sen. Angus King has joined in as well.  “I’m collecting ideas from everybody” said Enzi.  The Chairman has also said that he speaks with his House Budget counterpart every week on the matter.

Endgame Odds

Senate Republicans have to decide in the next ten days whether or not to move forward with passing a budget through their chamber.  GOP senators say they will only move on a budget if the House passes one but quietly acknowledge that few think the lower chamber can do that.

Per Senate Republican Whip John Cornyn:  “We’re watching the House…  If House Republicans fail to pass a budget forward, it’s pretty much a moot point issue.”

Considering that the Appropriations committee can, and will, begin moving forward with spending bills this week, even without a budget, the Senate’s collective opinion on whether a budget will move through the House seems obvious.

The longer the budget battle within the House GOP draws on the less likely it is that they will stick to a budget at all – a goal that may have been foolhardy at the outset.  Only one budget resolution has been adopted by Congress in the past six years and only nine budgets have been adopted in past 18 years, less often than not in elections years.

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Hearings this week:

Tuesday, April 12 —

9 AM: Improving USAJOBS website roundtable, House Financial Services

10:30 AM: FY17 SEC/CFTC Budgets, Senate Appropriations

Wednesday, April 13 —

10 AM: Puerto Rico, draft bill, House Natural Resources

10 AM: MARK-UP, budget savings bills, House Financial Services

10 AM: Flint water crisis, House Energy and Commerce

10:30 AM: Fixing the broken budget process, witnesses, Senate Budget

3:30 PM: Tax reform, House Ways and Means

Thursday, April 14  —

10 AM: Fixed-Income Markets, Fed Gov Powell, Treasury’s Weiss, Senate Banking

10 AM: JOBS Act enhanced capital formation at age four, House Financial Services

Friday, April 15   —

9 AM: CMS Advocate report, House Oversight