Fiscal Policy — FY17 Funded through April (Dec. 12)

Late Friday night, the Senate adopted the FY17 Continuing Resolution (CR) to fund the government through April 28 that passed the House the day before.  The Senate vote came only 62 minutes before the government would otherwise have gone into partial shutdown.

The 114th Congress is now in the books. Below we review the route to passage of its last act — the CR, its notable provisions, and the context for consideration of the new year’s Resolution.

Best,

Dana

____________________________

The Road to a CR

Some had hoped that Congress would produce an omnibus this year that would fully fund the government until fiscal year, FY18.   Senate Armed Forced Chair John McCain, along with Secretary of Defense Ash Carter, warned that a continuing resolution and the budget freezes it entails could severely hamper the military’s capabilities and planning.  This is true for social programs as well.

But the GOP leadership decided to use a CR to allow Trump a say on the budget early in his administration, which Speaker Ryan said was the leading consideration in why they decided to use a CR instead of an omnibus, as they anticipated that it would be better for their agenda to work with incoming President Trump instead of President Obama for a full FY17 budget.

House Leaders had originally hoped to pass a CR that would push the budgeting process into March,  but the Senate pushed for a period, as the early part of the Senate’s year will be occupied by approving Trump’s nominations and big-ticket legislation.

Last-Minute Maneuvers

 

Drama unfolded briefly in the Senate as several Senate Democrats, led by Sherrod Brown and Joe Manchin, threatened to hold up the process, demanding that a rider providing health benefits to 23,000 miners and widows for the CR’s four months be extended to a full year.

The odds were against this tactic from the beginning as the House had already adjourned for the year amid Speaker Ryan said that he had no intention of calling the chamber back to amend the bill.  If  Senators Manchin and Brown had held to their threats, it would have led to a short government shutdown that would have lasted at most until today.   At practically the last minute, the Senate halted debate and held the vote on final passage, 62 minutes before a government shutdown.

The Senate adopted the Resolution by 63-36.  The President signed the bill early Saturday morning.  It is interesting to note that the bill was not a clear party vote, with members from the center as well as  the wings of each party voting for and against the bill.

What is in the CR?

The CR currently provides enough money to fund government operations at the current levels until April 28, 2017.   House Appropriations Chair Hal Rogers called the CR a band-aid only addressing immediate funding needs and keeping below sequester limits.

It includes some key items advocated by one side or the other:

  •  supplemental DOD funding in the amount of $5.8 billion; the Department of State and USAID receive $4.3 billion.
  •  $4.1 billion to Disaster Relief for flooding, hurricanes and other natural disasters.
  •  $872 million to support the 21stCentury Cures Act of 2016 which passed Congress last week, with much of the funds addressing opioid abuse at the state level.
  •  $170 million dollars to address contaminated drinking water, finally addressing the water crisis that has happened in Flint, Michigan.
  •  $45 million to extend healthcare coverage for miners and widows.

Drawing initial attention was a provision to streamline the process of rewriting legislation that requires a nominee for Secretary of Defense to have been a civilian for at least seven years before taking office.  This would benefit Trump’s pick for Secretary of Defense, retired General Mattis, who does not meet the current requirements and would require a special Congressional waiver to hold the post.  The move has generated criticism from Democrats opposed to the waiver and Mattis’ appointment.

The CR also includes a controversial rider to block the SEC from finalizing a rule to  require public companies to disclose their donations to outside groups that engage in political spending. This had been a contentious issue in earlier resolutions, with Democrats hoping to push through legislation that would reduce dark money.

Finally, the CR prevents the IRS from issuing new guidance on what constitutes political activity by nonprofit organizations, further weakening dark money protections.

Reconciliation

Some Congressional leaders, particularly in the House, argued for a year-long CR, saying it would clear the decks and pave the way on the Hill for the incoming administration’s ambitious legislative agenda noted above.

But in the Senate, there is the opportunity afforded by reconciliation — policy instructions added to a Budget Resolution that have the force of law of adopted.  And they are filibuster proof, if revenue neutral over the ten-year budget window.  Getting 50 votes is far easier than 60 when you have a 52-48 majority.

Speculation is rampant about what the reconciliation instructions to a budget resolution covering the second six-months of FY17 might be, with ACA repeal  and tax reform most frequently mentioned.

Senate Budget Chair Enzi is believed to be preparing a FY18 budget for a April 7 release, to get the reconciliation process finished before Congress adjourns for the two-week Easter/Passover break.  This bill could also address comprehensive tax reform and a rollback of Dodd-Frank in reconciliation.

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