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Category: Congressional To Do

House Releases $81 Billion Supplemental

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Totaling $81 billion, the supplemental spending bill (HR 4667) released Monday evening is $37 billion more than the $44 billion the Trump Administration requested in mid-November. As supplemental appropriations, the money is designated as emergency spending, which does not require offsets under congressional budget rules. The White House included a list of offsets, which can be found here.

If approved as is, this latest disaster aid bill would bring the emergency spending total to $132.75 billion this year — significantly surpassing the $60 billion spent in the aftermath of Hurricane Sandy and the $120 billion appropriated after Hurricane Katrina.

The bill includes:

  • $27.6 billion for the Federal Emergency Management Agency
  • $26.1 billion for Community Development Block Grants for disaster recovery
  • $12.1 billion for the Army Corps of Engineers
  • $3.8 billion for agriculture recovery
  • $2.9 billion to assist schools in affected areas to rebuild and refurbish
  • $1.6 billion for the Small Business Administration disaster loan program
  • $1.5 billion to repair military facilities
  • $1.4 billion for damages to federal highways
  • $600 million in economic development grants

The bill includes language that would allow individuals who have lost property to wildfires to deduct damage costs on their taxes, would remove the penalty for withdrawing money from a retirement account and would incentivize donations to people and regions rebuilding after wildfires.

House leadership has not yet announced whether the supplemental aid package will be added to the stopgap spending bill (H J Res 124) heading to the House Rules Committee on today and the House floor after that.

Current stopgap funding  expires Dec. 22.

Tax Cuts and Jobs Act

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The House Republican Leadership unveiled their much-awaited Tax Cuts and American Jobs act.

At first glance, the measure would:

  • cut the corporate tax rate to 20%;
  • reduce the seven individual tax brackets into four;
  • nearly double the standard deduction to $24K (married), $18,300 (head of household), and 12,200 (single);
  • increase the child care tax credit to $1,600 (from $1000);
  • change the mortgage interest deduction to apply to house loans up to $500,000 on new home purchases while existing homes would be grandfathered;
  • repeal the student-loan interest deduction;
  • private universities with assets exceeding $100,000 a student would pay a new 1.4% excise tax on their net investment income; and
  • businesses would no longer be able to deduct entertainment expenses, though today’s rules for business meals would remain.

The charitable deduction will not change, and the tax provisions related to 401(k)s are unchanged.

The bill text is here.

A section-by-section of the measure is here. 

Federal Relations is still going thought the measure and will continue to provide updates.

House Passes Emergency Spending

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Today, the House voted overwhelmingly to provide $36.5 billion in disaster relief for victims of recent hurricanes and wildfires, as well as emergency credit to help Puerto Rico keep its government functioning. The spending bill, known as a supplemental appropriations measure, now moves to the Senate for consideration next week.

More Disaster Relief; Tax Reform Slowly, Slowly

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It’s getting expensive to deal with disaster relief.

Going first, the House is scheduled to vote this week on the second installment of hurricane relief aid. While the Trump administration requested $29.3 billion, lawmakers have been busy trying to add to the total.

Texas lawmakers want an extra $18.7 billion for victims of Hurricane Harvey, which devastated coastal Houston. The Governor of Puerto Rico asked for another $4.6 billion to help the territory deal with the aftermath of Hurricane Maria. Florida lawmakers have asked for an additional $26.9 billion for victims of Hurricane Irma.

If all those requests were honored, the total aid package would balloon to $79.5 billion. Also, House Armed Services Chairman Mac Thornberry (R-TX) has lobbied the White House for extra money for missile defense to combat the threats from North Korea.

Disaster aid is considered emergency funding that is exempt from discretionary spending limits imposed by the Sequester. However, with the ultimate damage assessment from three recent hurricanes projected to reach a few hundred billion dollars, some conservatives are beginning push to pay for long-term rebuilding costs by cutting other programs, which is a nonstarter with Democrats.

This second installment does not even consider how the US is approaching federal disaster preparedness and recover. For example, the Administration’s request includes $16 billion to cancel debt owed by the National Flood Insurance Program, which has faced mountains of red ink since Hurricane Katrina in 2005. The FEMA-run program literally can not pay claims.

…and Congress and the Administration haven’t started talking about wildfires yet…

 

Meanwhile, House and Senate leadership are slowly trying to fill in the Administration’s framework for tax overhaul. Generally, lawmakers have said the cost of tax rate cuts would be offset by eliminating most of deductions and credits in the tax code. However, the few ideas floated publicly have run into stiff resistance.

The idea to include a border-adjustment tax, that would have raised $1.2 trillion over 10 years, has been dropped after business lobbies complained that it would raise prices for consumers. Also, the idea to eliminate the state and local tax deduction has unleashed a huge volume of complaints to tax writers. Plans to completely eliminate the “death tax” have also been sidelined as it becomes more clear that reducing of changing existing taxes will be more politically manageable than outright repealing them.

 

Budget? Budget?

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The Senate Budget Committee will take its first steps on a framework for federal spending and tax cuts in FY 2018 this week.

The Senate Budget Committee released its FY 2018 draft resolution on Friday that would establish the path for consideration of revenue, spending, and other fiscal legislation.

Senate Committee will debate overall limits on discretionary spending for the coming fiscal year and 10-year projections, as well as mark up the resolution on Wednesday and Thursday. If adopted, it could become an enforcement tool — through points of order — during the annual appropriations process. House and Senate majority were attempting to use   the FY 2018 budget as a means to further repeal the ACA — the House included language to instruct committees to do so — but all language instructing the Senate Committees to do similar has been stripped. Rather, the Senate focuses on tax reform, signaling a pivot in the Majority’s priorities.

The focal point of the legislation is the draft language instructing the Senate Finance and the House Ways and Means committees to increase the deficit by $1.5 trillion over the next decade. That number gives the tax-writing panels the opportunity to alter the tax code.

The whole Senate will begin its annual Budget consideration process, known as “vote-a-rama,” the week of October 16th.

Meanwhile, the full House plans to vote Thursday on its own budget resolution, which also would advance what would be the most sweeping tax overhaul in more than three decades. That plan would require Congress to cut at least $203 billion from entitlement programs over 10 years. House leadership has suggested the Senate version is more likely to prevail in a final compromise and the language on entitlements is likely to be stripped on the House floor.

There are other notable differences between the House and Senate budgets. For instance, the House budget includes instructions for a tax plan that does not increase the deficit, but the Senate budget would let tax writers add $1.5 trillion to the deficit over a decade. The Senate provides $549 billion for defense spending and $516 billion for nondefense discretionary programs, which are levels in line the the Budget Control Act caps. The House measure provides $621.5 billion for defense programs and $511 billion for nondefense discretionary programs. Since the House provides levels significantly beyond the BCA caps, enacting such a measure would take an act of legislation (and a signature by the President), which is beyond the scope of a typical Congressional budget, a document that only binds Congress and is not signed by the President.

Eventually, the two chambers would have to agree on a budget for Congressional Republicans to use reconciliation.