Outlook: Time for a Marathon Tax Markup

The biggest action this week takes place in the Ways and Means Committee.

President Trump holds an example of what a new tax form may look like during a meeting on tax policy with Republican lawmakers in the Cabinet Room of the White House on Thursday. He is joined by House Speaker Paul Ryan (left) and House Ways and Means Committee Chairman Kevin Brady.
AP Photo/Evan Vucci
Casey Wooten
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Casey Wooten
Nov. 5, 2017, 8 p.m.

The House tax-overhaul bill is finally out, and now it’s time to move it through the committee gauntlet.

The Ways and Means Committee is set to begin marking up the bill Monday, and it looks like it’s going to be a marathon.

“I do expect to conclude by Thursday of next week,” Ways and Means Chairman Kevin Brady said Friday at an event sponsored by Politico.

Moving the bill through committee as quickly as possible is integral to GOP hopes of getting a tax package signed into law by the end of the year, with House floor consideration, a separate Senate process, and complicated conference negotiations still to come.

Meanwhile, the House will vote on two bills to ease regulations on small businesses. One measure would exempt businesses from registering with the Securities and Exchange Commission if they are raising $500,000 or less from 35 or fewer investors. The other act would loosen the National Labor Relations Board’s 2015 ruling that defined a “joint employer.”

The House will also vote on a measure aimed at simplifying the federal government’s role in hydropower projects. The measure would classify hydropower as renewable energy under the 2005 Energy Policy Act and place the Federal Energy Regulatory Commission in charge of authorizing hydropower projects. The bill faces opposition from Democrats over environmental concerns.

Across the Capitol, as the Finance Committee prepares to unveil its own long-awaited tax plan, the Republican-led Senate will continue its crusade to finally confirm the Trump administration’s nominations, voting to advance President Trump’s pick of Steven Engel to be an assistant attorney general Monday evening. (Trump announced his intent to nominate Engel in January.) Last week, the Senate confirmed Allison Eid and Stephanos Bibas to be U.S. circuit judges, as well as almost a score of State Department picks en bloc. The Senate expects to consider a number of other administration picks—from the Environmental Protection Agency to the departments of Transportation and Defense—in the coming days.

Here’s what else is on tap:

DEFENSE AND FOREIGN POLICY

The Senate Banking, Housing, and Urban Affairs Committee is set to markup the Banking Restrictions Involving North Korea Act of 2017, which would impose new sanctions on Pyongyang, on Tuesday.

The Senate Armed Services Committee will also meet Tuesday to consider four nominees: Robert Behler to be director of operation test and evaluation at the Defense Department; Dean Winslow to be an assistant Defense secretary for health affairs; Thomas Modly to be Navy undersecretary; and James Geurts to be assistant Navy secretary for research, development, and acquisition. The panel will gather again Thursday for a hearing on three more nominees: Robert McMahon to be an assistant Defense secretary; Bruce Jette to be an assistant Army secretary; and Shon Manasco to be an assistant Air Force secretary.

Meanwhile, the Senate Intelligence Committee is set to hold a closed briefing on Tuesday.

ENERGY AND ENVIRONMENT

The nomination quarrel continues this week on the energy and environment front. Environment and Public Works Committee members will hear testimony Wednesday from Kathleen Hartnett White, the president’s pick to be a member of the Council on Environmental Quality, and Andrew Wheeler to be Deputy Administrator of the EPA. Democrats are lining up against both nominees, accusing them of being too close with industry to objectively regulate pollution.

The Senate, meanwhile, is set to approve the nomination of Bill Wehrum, an attorney and former EPA political appointee under George W. Bush, as chief of the agency’s air office, but Democrats may choose to draw out the process. Wehrum has challenged the EPA’s authority to address climate change. Senate Energy and Natural Resources Chairwoman Lisa Murkowski also plans to unveil legislation to open the Arctic National Wildlife Refuge to oil drilling. The committee faces a nonbinding, mid-November deadline to produce legislation to meet a $1 billion revenue-generating budget instruction.

A large-scale bill to overhaul federal regulations and revenue sharing for onshore- and offshore-energy production will also hit the House Natural Resources Committee for a hearing Tuesday. The legislation is the House’s version of a comprehensive energy overhaul, but it differs significantly from the counterpart Senate legislation, which lawmakers introduced over the summer. The House Natural Resources Committee will hold a hearing on the Puerto Rican recovery effort Tuesday as well.

HEALTH

Obamacare could still infiltrate the tax-reform debate if more Republican lawmakers decide to make a push to repeal the individual mandate, which imposes a fine upon people who do not obtain health coverage. Repeal of the requirement is not part of the tax package that was revealed last week.

The House on Friday passed legislation along partisan lines to extend funding for the Children’s Health Insurance Program and community health centers. House Energy and Commerce Committee ranking member Frank Pallone, however, has warned that the Senate is not likely to take up the bill and the issue will languish until the end of the year while some states begin to run low on CHIP funds.

The Energy and Commerce health subcommittee will have a hearing Wednesday about alternative payment models, including qualified APMs under the Medicare Access and CHIP Reauthorization Act of 2015.

The same day, the House Committee on Education and the Workforce will have a joint hearing with the subcommittee on early childhood, elementary, and secondary education and the subcommittee on higher education and workforce development on how opioids are impacting communities.

TAXES

This week will be the moment for Democrats to put some tough votes to their GOP counterparts on the Ways and Means committee. They’re likely to introduce amendments pushing back against some of the elements of the tax bill that they’ve railed against, such as the proposal to partially eliminate the state and local tax deduction and another to limit the mortgage-interest deduction.

“We’re going to be adding some housing measures; we’re going to be debating those fully,” committee ranking member Richard Neal told reporters Friday.

Republican members could push for a few changes of their own, such as changes to rules preventing abuse of the new 25 percent rate for pass-through entities. Some Republican members from high-tax states have said they want an increase of the $10,000 cap for the deduction on property tax, with a few calling for a $12,500 cap instead.

The plan in the House is to vote on the tax bill in the full chamber before the Thanksgiving break. Brady said Friday that there will be no amendments on the full House vote.

The Joint Committee on Taxation, the nonpartisan body that scores tax legislation, released estimated budget effects for Brady’s bill late Thursday. The bill, the committee says, would increase the deficit by about $1.49 trillion over a decade, skirting just under the $1.5 trillion in deficit spending allowed for the tax bill by the fiscal 2018 budget resolution that Congress adopted last month.

On Friday, Brady released his chairman’s mark of the bill, which includes minor changes. The mark moves up the date at which the government would begin using a chained consumer price index to calculate inflation in the tax bill. That could potentially reduce the benefit provided by the tax cuts, The Wall Street Journal reported.

One element to keep an eye on: the long-shot chance that lawmakers will include a repeal of the Affordable Care Act’s individual mandate in the tax bill. It would be a win for House conservatives and would raise some $400 billion, but would make the bill difficult to pass in the Senate. Some members have said they’d like to see the repeal in the bill, but it’s not a red line for them.

“It’s icing on the cake,” Rep. Dave Brat, a member of the conservative House Freedom Caucus, said Friday.

So far, tax writers and leadership have resisted, not wanting to muddy up an already-complicated effort to advance the tax bill. Still, Brady didn’t rule out the possibility Friday.

After Ways and Means finishes its markup, the Senate will release its version of the tax bill, Finance Chairman Orrin Hatch said in a statement Wednesday.

TECHNOLOGY

The Senate Commerce Committee has a busy week on the tech and cybersecurity fronts.

On Tuesday, the subcommittee on communications, technology, innovation, and the Internet will convene a hearing on how the ever-increasing bevy of Internet-connected devices—the “Internet of Things”—can be harnessed to increase prosperity in rural America. But the real action comes Wednesday, when the full committee is set to vote on the Stop Enabling Sex Traffickers Act, a bill designed to give state prosecutors and sex-trafficking victims greater legal powers against online platforms accused of facilitating sex traffickers. Silicon Valley has lobbied against the legislation, arguing that it will flood tech firms with frivolous lawsuits. But most senators appeared strongly supportive of the legislation during a September hearing. On Friday, the Internet Association, Silicon Valley’s lobbying arm in Washington, came out in support of a “bipartisan compromise” on SESTA legislation. The group thanked Sens. Rob Portman and Richard Blumenthal for working with tech companies on the compromise.

The Senate Commerce Committee will also hold a full hearing Wednesday on how to prevent massive data breaches like the recent Equifax hack, which saw the financial data of hundreds of millions of Americans compromised after the credit-rating agency was targeted for cyberattack. Both the current and former chief executives of Equifax are slated to testify, as is the former chief executive of Yahoo!, which saw its user accounts hacked on a massive scale in 2013. The committee will also vote Wednesday on the nomination of Jim Bridenstine to run NASA.

On Wednesday the Senate Homeland Security and Governmental Affairs Committee will vote on the nomination of Kirstjen Nielsen to head the Homeland Security Department. If confirmed, Nielsen would be the first Homeland Security secretary with a background in cybersecurity policy.

On Thursday, the House Committee on Science, Space, and Technology will hear an update from NASA on the space agency’s development of new space-exploration systems.

WHITE HOUSE

Trump will spend the entire week in Asia. He arrives in Seoul, South Korea, on Tuesday, speaking at the National Assembly on Wednesday before departing for Beijing. On Friday, he goes to Da Nang, Vietnam, to attend the annual Asia Pacific Economic Cooperation summit. On Saturday, he moves to Hanoi before going to Manila in the Philippines on Sunday.

Daniel Newhauser, Alex Rogers, Adam Wollner, Brian Dabbs, Erin Durkin, Casey Wooten, Brendan Bordelon and George E. Condon Jr. contributed to this article.
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