FY 2016 — Policy Riders (Nov. 30)

Mike & Co. —

Hi again — hope everyone got a little downtime and home time during the Thanksgiving break. 

Congress is back in now for the home stretch to year-end adjournment, for which no target date has been set.  The first deadline it faces is passing a long-term infrastructure bill after approving yet another short-term funding patch before leaving for Thanksgiving.  That patch expires this Friday, December 4.

 Signs are good that conferees will approve a three-year package — that would make it the first transportation funding legislation to pass that lasts longer than two years since 2005.   Ex-Im reauthorization is still in the mix.  More on this in the coming days.  

Signs are indicating less certainty regarding the outcome yet of the negotiators on staff who worked nearly round the clock in a basement conference room over break on the FY 2016 budget. The reason rests with the many riders already attached — Shelby 2.0, in toto, among them — and others under consideration.  A brief overview of the GOP’s highest priority and the most policy-significant riders currently under discussion follows.



The budget deal that was John Boehner’s swan song last month increased the overall discretionary spending level by $33 billion for fiscal 2016.  But it did not specify how that money should be spent or what additional policy riders might be included in a year-end omnibus spending bill needed by December 11 to keep the government open.

Looming over the negotiations is memory — rueful to Dodd-Frank advocates — of last year’s iteration of this process when Congress approved the last-minute provision requiring the riskier derivatives trades made by bank holding companies to be conducted outside the units that hold deposits and enjoy the benefits of deposit insurance.

The focus this year:

CFPB —  Chief among the perennial riders geared toward hemming in the CFPB are ones to put the bureau under a five-member commission chosen by party leaders, instead of a single director; block the CFPB’s efforts to combat discriminatory auto loans; and curtail the use of forced-arbitration clauses with class-action bans.  This year, Democrats are likely to remain united and successful in opposition to other areas of the law that Republicans want to change, in particular the CFPB.

Community Banks/SIFIs — Republicans are expected to focus on aspects of it that moderate Democrats have said they are open to changing, such as easing rules for community banks. There may well also be sufficient bipartisan support for raising the SIFI threshold at which institutions face a more stringent set of Federal Reserve regulations because of their size.  This increased scrutiny now applies to banks with $50 billion or more in assets.  The Shelby 2.0 cutoff is $500 billion.

Fiduciary Rule — Another high priority rider for the financial community: preventing or delaying new conflict-of-interest provisions for investment advisers who manage retirement funds.

EITC & CTC/Tax Extenders  — Negotiators are also working on a bipartisan compromise to make a series of provisions in Obama’s original stimulus program permanent that expire in 2017.   These have expanded the earned-income tax credit that helps Americans with low incomes and created a child tax credit that has the same effect.  In exchange for locking in these credits, Democrats would agree to make permanent the research and development tax credit and other business tax breaks that Congress typically extends anyway.

Campaign Finance — Mitch McConnell has a pet rider, a provision being discussed that would eliminate caps on the amount of cash that parties may spend in coordination with their candidates.

Non-Profits — Another GOP-backed effort seeks to block the IRS and the SEC from enacting additional regulations and disclosure requirements on politically active nonprofit groups.

Per Kevin McCarthy today, no votes on riders relating to Planned Parenthood funding.  But what about the myriad others — on my clean air standards, accepting Syrian refugees or a perennial issue such as health care — any of which  would instantly invite a veto and send us back to square one.



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