Omnibus Situation (Mar. 22)

Update 258 — Omnibus Situation:
Last Stop Before Two-Week Recess

As of this writing on Thursday afternoon, one more piece of Congressional business remains before members and staff can start a long and long-awaited recess.  Once again, Congress confronts a deadline of midnight tomorrow to keep the federal government funded. But no one wants to wait that long.

And once again, a budget that is not supposed to make new policy does so, with significant provisions and omissions, with some key Democratic gains.  Omnibus status and details, see below.

Best,

Dana

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The Omnibus Toplines

Last night, congressional leaders and White House officials reached a deal on H.R. 1625, a 2,232 page, $1.2 trillion fiscal 2018 omnibus spending package.

Top line figures indicate:

• $629 billion in defense discretionary spending
• $579 billion in non-defense discretionary spending

The deal increases spending for appropriators by margins not seen since 2010:

• $80 billion above prior restrictions for defense-related spending
• $63 billion more for non-defense related spending

President Trump’s FY19 budget request proposed cutting $54 billion from the existing non-defense statutory cap. House Republican Appropriations bills were written at a level cutting $5 billion from the total cap.  Following the Republican majorities’ failure to enact Appropriations laws, the Bipartisan Budget Act of 2018 increased non-defense discretionary (NDD) spending by $63 billion. The omnibus conforms with the Bipartisan Budget Act of 2018 mandate.

Majority Leader McConnell, Minority Leader Schumer, Speaker Ryan, and Minority Leader Pelosi may adjust these spending numbers and strike the final deal to avert a government shutdown before midnight tomorrow.  The bill would extend the government’s spending cliff to September 30, guaranteeing six months without a major budgetary shutdown.

Negotiation Points and Resolution

The debate around the omnibus focused on a few key provisions each with their own nuances regarding funding levels, disbursement schedules, and administrative issues.  Democrats faired fairly well in these negotiations.

One victory was an item to permit the CDC to study gun violence by incentivizing municipalities to update the NICS database, which is used for background checks. Democrats also beat back attempts by Sens. Collins and Alexander to fund high risk pools in the health insurance marketplace.  Similar provisions: limiting the funding for Trump’s wall to narrow projects, primarily reinforcing and updating existing fencing.

But Democrats are not fully onboard with this bill.

—  there are no DACA protections
—  the Gateway, a key infrastructure project in New York and New Jersey is not directly funded
—  massive increases in military spending outstrip domestic discretionary increases

Freedom Caucus Republicans and Rand Paul are not enthused about this bill as it increases spending by $143 billion; they have said that Speaker Ryan and Majority Leader McConnell left too much on the table.

Policy Riders

Packed into this very large omnibus package are numerous policy riders on issues that run the gambit from health care to labor issues, to environment and more. With respect to economic policy, the following policy riders related to tax, infrastructure, and financial regulation were worked in.

Tax Riders: Apparently, the “meticulous” legislative process surrounding the Tax Cuts and Jobs Act missed a few details.

IRS Funding – Despite Trump’s expressed desire to cut IRS funding, this deal increases its budget. The omnibus also allocates $320 million to the Internal Revenue Service to support the agency as it implements the new law. Though the IRS will still be prohibited from auto-completing parts of tax returns, a continued victory for tax preparers like Turbotax. In addition, the base IRS budget was cut by $125 million from 2017 in nominal terms, making the net gain of $195 million.

The Tax “Grain Glitch” Fix – Representatives from farming states have decried a glitch in the Tax Cuts and Jobs Act that gives farmers greater tax savings if they have sold crops to farm cooperatives at a disadvantage to corporate competitors. Agricultural trade groups pushed Senators like Chuck Grassley (R-IA) and Pat Roberts (R-KS) to change this “Grain Glitch”. The proposal, that limits farmers to a 20 percent deduction of their net income from sales to cooperatives, has been included in the omnibus.

Low-Income Housing Tax Credit – In exchange for the “grain glitch” amendment to the GOP tax law, Democrats were able to win an expansion of the low-income housing tax credit by 12.5 percent from 2018 to 2021.

Infrastructure Spending:  The omnibus also includes minimal increases in infrastructure spending. While the funds are badly needed, significantly more funding is needed to address the nation’s crumbling infrastructure.  The American Society of Civil Engineers estimates, conservatively, that Congress will require a $2 trillion investment over the next decade to adequately address the nation’s infrastructure needs.

Spending Increase – The omnibus sets aside $10 billion in new spending for infrastructure including:
◦ $2.6 billion more for the Federal Highway Administration
◦ $1.2 billion more for the Federal Railroad Administration
◦ $600 million for high-speed internet

Dodd-Frank Rider: Just after the Senate passed its bipartisan banking bill, S. 2155, House Republicans continue to take aim at the Dodd-Frank Act in the omnibus bill.  But the financial services rider the GOP won here is of marginal significance, merely requiring the OMB to report on Dodd-Frank’s cost.

Cost Estimates of Dodd-Frank Implementation – The omnibus includes a provision requiring the OMB to report to the Appropriations Committee on the cost of implementing the Dodd-Frank Act.

Omnibus State of Play

This morning, the House of Representatives narrowly passed a procedural rule 211-207 to open up debate on H.R. 1625.  11 Democrats, expected to vote no, were waiting to vote when the vote was gaveled closed in a disruptive break from precedent and norms.

The House ultimately passed the omnibus bill comfortably Thursday afternoon by 256-167 and now it moves to the Senate.  Sen. Rand Paul has expressed vehement opposition to the bill on multiple grounds. But the omnibus package is unlikely to change in the Senate.  The only question will be how long will Sen. Paul hold the floor before the Senate is able vote. While this bill will, barring sudden snowfall, be signed into law in advance of the midnight deadline tomorrow night, the drama in the details is yet to conclude.

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