The Senate’s fiscal 2018 budget is in the books and on its way to the House. Up next: overhauling the tax code.
House lawmakers are expected to quickly address the budget this week, paving the way for tax reform to rise to the forefront of the congressional work schedule.
“Our plans are in place, the train’s on the track, and we’re rolling down the track,” House Speaker Paul Ryan said Friday on CBS This Morning.
Ryan also let loose a tax bombshell on the television show: The upcoming tax bill will include a fourth top bracket in addition to the three proposed, a move that some lawmakers have said would be a necessity both to raise additional revenue and also to beat back criticism that the plan is a giveaway to the wealthy. Ryan didn’t specify what rate the fourth top bracket would be. The current proposal would lower the top rate from 39.6 percent to 35 percent, so something in between those two figures is likely.
That’s just one of the many big decisions left to tax writers in the coming weeks. The budget calls for the Senate Finance Committee to send a tax bill to the full chamber by Nov. 13. Still hanging out there is the fate of the state and local tax deduction, which Republican House members in high-tax states have said would hit the middle class. Also up for debate is how far tax writers will cut the deduction for interest paid on business loans, how to keep individuals from gaming the new 25 percent rate for pass-through entities, and how to keep multinationals from shifting profits and operations overseas under the new territorial tax system.
It’s unclear if the House—back from recess—will simply take up the Senate budget or go to a conference committee and resolve its own version, passed earlier this month, with the Senate’s. It’s likely the House will take up the Senate version, but either way, the final product is likely to look much like the Senate effort.
It all comes down to whether Ryan can bring along House conservatives to vote for the Senate budget. House members have a strong scheduling incentive: The sooner a budget hits the president’s desk, the sooner they can move forward with writing the tax bill, which many on Capitol Hill and in the administration have promised will get done by the end of the year—an ambitious timeline.
Rep. Mark Meadows, chairman of the conservative House Freedom Caucus, told Vox last week that he’d be inclined to back the Senate budget if it meant moving to a tax bill sooner.
The Senate budget calls for $1.5 trillion in deficit-financed tax cuts. That’s a lot of spending, but it may not be enough. The Committee for a Responsible Federal Budget, a spending watchdog, said the current tax framework—a broad outline of the GOP tax plan released in September—could increase the deficit by $2.2 trillion over a decade. And if tax writers cede ground on the state and local deduction or other provisions, they’ll have to find revenue elsewhere.
Over the next month, they will have to settle these questions, and that may mean picking winners and losers in order to close the fiscal gap, a process that Washington’s lobbying establishment will no doubt be keen to influence.
“It’s going to be a knife fight,” Sen. Bob Corker said last week about the upcoming lobbying push.
Also on the House floor, the chamber may follow up on President Trump’s threat to abandon the 2015 Iran nuclear agreement by voting on a measure to increase punitive sanctions against individuals and companies involved in the country’s ballistic-missile program. The bill would allow the president to impose sanctions on Iranian government agencies as well as foreign individuals and companies who provide the country materials, financing, or other help toward the development of the weapons. Some Republicans, however, oppose holding such a vote. The House is also expected to vote on a measure authorizing sanctions against Hezbollah, in an effort to limit its access to international financial institutions and the drug trade.
Finally, the House will consider two Judiciary Committee bills, one aimed at curbing the government practice of settling lawsuits with regulations and another targeting the Justice’s Department’s ability to force defendants to donate to outside groups as part of settlement agreements.
The Senate will take up the House-passed $36.5 billion aid package to fund the National Flood Insurance Program, and provide hurricane and wildfire relief.
Here’s what else is on tap:
DEFENSE AND FOREIGN POLICY
Trump’s personal attorney, Michael Cohen, was scheduled to testify before the Senate Intelligence Committee in an open setting Wednesday morning, but the panel postponed the hearing last Friday. No new date has been set yet. The committee will hold two closed hearings this week as it continues its investigation into Russian interference in the 2016 election.
Elsewhere, the Senate Foreign Relations Committee is set to have a hearing on U.S. policy towards Myanmar. On Wednesday, the Senate Armed Services Seapower Subcommittee will meet for a closed briefing on threats facing the Navy, and the House Foreign Affairs Middle East and North Africa Subcommittee will hold a hearing on the next steps following Trump’s decision to decertify the Iran nuclear agreement.
ENERGY AND ENVIRONMENT
The Senate aims to take up a set of environment and energy plans that it shelved last week because of the budget process and a hitch with an Environmental Protection Agency nominee. The Environment and Public Works Committee will vote on four EPA nominations Wednesday, as well as a reappointment to the Nuclear Regulatory Commission.
Chairman John Barrasso postponed the vote last week after Sen. Joni Ernst expressed concerns over how the nominee for the head of the air office would implement a biofuels law. EPA chief Scott Pruitt tried to ease the concerns of Ernst and other corn-state Republicans with a letter after the postponement, and the rescheduling of the committee vote indicates that likely swayed Ernst.
The EPA and Interior Department appropriations bill is tentatively rescheduled for a hearing this week after the Appropriations Committee yanked it last week, citing uncertainty over the legislative process for the budget. The Energy and Natural Resources Committee, meanwhile, will hold a hearing on cybersecurity, and the EPW Committee will take up a wildfire-prevention bill.
The House will be quiet on the environment and energy fronts. A Natural Resources Committee hearing on state management of sage grouse is the only event planned.
Trump sent very mixed signals last week about his support for a bipartisan deal that shores up Obamacare by providing cost-sharing-reduction payments while also giving states more flexibility to design their marketplaces. But Sens. Lamar Alexander and Patty Murray are pressing forward with the effort, having introduced language last week with 24 cosponsors.
The House Energy and Commerce Oversight and Investigations Subcommittee will hold a hearing on Tuesday to examine the Health and Human Services Department’s public health preparedness and response to the 2017 hurricane season.
The full committee on Wednesday will have a hearing for a status update on federal efforts to combat the opioid crisis.
The House Appropriations Committee’s Health and Human Services subcommittee will have an oversight hearing Tuesday on the role of facility and administrative costs in supporting research funded by the National Institutes of Health. The same subcommittee will have a hearing Wednesday to get an update on the state of science and potential discoveries for Down syndrome.
It’s a jam-packed week for tech and cybersecurity policy on Capitol Hill. The House Science, Space, and Technology Committee kicks things off on Tuesday with a joint subcommittee hearing on America’s progress in the quantum-technology arms race. Quantum computing and cryptography have the potential to fundamentally transform industries—particularly the energy and cybersecurity sectors—but experts worry the United States is falling behind Chinese efforts.
With legislation mandating increased transparency for online political ads now circulating in both congressional chambers, on Tuesday the House Oversight and Government Reform Information Technology Subcommittee plans to examine the laws surrounding political-ad disclosures and disclaimers. Digital ads are currently exempted from oversight by the Federal Election Commission, which some lawmakers contend made it easier for the Russian government to purchase ads on Facebook and other platforms that promoted politically divisive issues in the run-up to the 2016 election.
The Senate Intelligence Committee may mark up a bill as soon as next week reauthorizing the National Security Agency’s ability to collect overseas signals intelligence. The bill, sponsored by Chairman Richard Burr, would renew the NSA’s ability under Section 702 of the Foreign Intelligence Surveillance Act to collect communications taking place outside of American soil. That includes the communications of American citizens, which are often caught up in the NSA’s dragnet. Reformers have sought to limit the collection of U.S. citizens’ data, but Burr’s bill is expected to provide the spy agency with a clean reauthorization. This week’s markup is expected to take place behind closed doors, further worrying civil-liberties advocates who had hoped for an open hearing.
The threat posed by Russian antivirus firm Kaspersky Lab to the U.S. government will be the subject of a Science, Space, and Technology Oversight Subcommittee hearing Wednesday. The Homeland Security Department banned the use of Kaspersky technology at all federal agencies last month, but how many agencies use the software—and whether any federal operations have been compromised—remains unclear. Kaspersky Lab has been accused of operating as a Trojan horse for Russian spy services, which reportedly used the software to scan for classified American intelligence on private networks.
On Tuesday, the House Homeland Security Committee will hold a joint subcommittee hearing on coordinating public and private-sector efforts to promote greater cybersecurity education. The House Energy and Commerce Communications and Technology Subcommittee will hold an oversight hearing on the Federal Communications Commission on Wednesday, with all five FCC commissioners slated to attend. The Senate Commerce Committee will also meet Wednesday for a hearing on commercial satellite services and how the next generation of private-sector satellite operations will impact consumers. On Thursday, the Senate Energy and Natural Resources Committee will hold a hearing on technologies that could be used to protect electric grids and other energy infrastructure from cyberattack.
President Trump this week mixes diplomatic, political, and domestic business, starting on Monday with a meeting with Singapore Prime Minister Lee Hsien Loong. Also on Monday, he will present the Medal of Honor to an Army medic who heroically weathered heavy enemy fire in Vietnam in 1970 to rescue and treat comrades despite his own injuries. On Tuesday, Trump will attend the Senate Republican policy lunch to push his tax cuts. On Wednesday, he will travel to Dallas for a fundraiser for his own reelection campaign and the Republican National Committee. Back in Washington on Thursday, he will keep a long-delayed promise to formally declare the opioid epidemic a national emergency, something he did unofficially more than two months ago.
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