Outlook: Kicking Off a Pivotal Midterm Election Year

The Senate returns to session this week with some unfinished business punted from December.

Senate Majority Leader Mitch McConnell discusses the GOP agenda for 2018 and touts his accomplishments in the first year of the Trump administration, during a Dec. 22 news conference.
AP Photo/J. Scott Applewhite
Jan. 1, 2018, 8 p.m.

Republicans have one goal in 2018: Hold on to power.

For the first time in a decade, they won control of the House, Senate, and White House in 2016. They then passed the most significant tax-code overhaul in 30 years, eliminated the Affordable Care Act’s individual mandate, confirmed a dozen circuit-court judges and put Neil Gorsuch on the Supreme Court.

But President Trump and the Republicans are very unpopular, beset by its division between moderates and conservatives, and bedeviled by the investigations into Russian interference in the 2016 election and possible coordination between the Trump campaign and Moscow.

And with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell at odds on what to do this year, they will determine the fate of the Republican agenda in a meeting with the president this week.

While it will be a politically perilous midterm year for Republicans, it may also be Ryan’s last in Congress. So the speaker has set his sights high on finally shrinking the size of government and decreasing the deficit, which is projected to increase by an additional trillion dollars in the next decade due to the tax cuts passed last year. In the spring, the speaker wants to reform Medicaid, as well as welfare programs such as Temporary Assistance For Needy Families and those that administer food stamps. Ryan is also open to taking another crack at replacing the Affordable Care Act.

McConnell is less ambitious. Republicans in the Senate couldn’t pass a bill to replace the ACA, and will soon have one fewer member with the swearing-in of Alabama Democrat Doug Jones to replace Republican Luther Strange. In December, McConnell told his colleagues who want to try again, “I wish them well.”

So rather than taking on an overhaul of the welfare state or health care sector, the Senate leader would like to move on smaller bipartisan measures that would help him protect his 51-seat majority. McConnell wants an immigration deal that includes granting legal status to young adults who illegally came to the country as children. He’ll also take up a significant bipartisan Senate bill that amends the Dodd-Frank Act to reduce regulatory requirements for smaller financial institutions. An infrastructure deal is also a possibility.

What Republicans decide to do ultimately falls to the president. A senior administration official said in December that Trump has been “more and more excited about trying to address welfare reform,” but the White House has also said it will unveil an infrastructure package this year. Trump’s answer could very well decide whether Republicans can hold on to power.

On Wednesday, Jones and Minnesota Lt. Gov. Tina Smith—who was appointed to fill the seat left when Sen. Al Franken resigned—will be sworn into the Senate. The chamber will then begin consideration of John Rood to be Defense undersecretary for policy.

The House, meanwhile, is out of session this week after GOP leaders in that chamber decided to delay their return from recess until Jan. 8.

Here’s what else is on tap:

DEFENSE AND FOREIGN POLICY

Lawmakers will continue to work towards striking a deal to raise the budget caps for defense spending. Before the holiday break, House Republicans considered tying a one-year defense-budget bill to a short-term continuing resolution for the rest of the government. But they abandoned that plan since Senate Democrats, who are needed to pass any budget plan, are still pushing for parity between defense and nondefense spending.

Some senators are also keeping an eye on Jan. 11, the next deadline for Trump to recertify the Iran nuclear deal. In October, Trump warned that he would scrap the deal if Congress and U.S. allies abroad could not rework it. A proposal from GOP Sens. Bob Corker and Tom Cotton gained little traction at the time, but Corker has said he is also in talks with his counterpart on the Foreign Relations Committee, Sen. Ben Cardin, on a bipartisan solution.

ENERGY AND ENVIRONMENT

A renewed attempt to reach a bicameral, bipartisan compromise on a sweeping disaster-relief package will be the focal point for the Senate’s environment work in the first week of the new year. The Senate refused to act on a House-passed measure before the holiday break, and Democrats are calling for a disaster package to pass alongside a fiscal 2018 funding bill, which needs to reach the president’s desk before current funding expires Jan. 19 at midnight.

Many Democrats say the House legislation fails to properly boost the ongoing recovery in Puerto Rico, which has only restored about 65 percent of its electricity grid, roughly 100 days after Hurricane Maria wreaked havoc on the island territory. But Senate Majority Whip John Cornyn is also arguing that the bill doesn’t do enough for Texas.

Meanwhile, the White House may unveil nominations for key environment posts that the Senate failed to act on before the end of the year. The White House will have to decide whether it wants to renominate Kathleen Hartnett White, who was tapped to head the White House’s Council on Environmental Quality. Democrats are challenging White’s controversial views on climate change and alleged plagiarism of responses to oversight questions.

The top chemical-regulation position at the Environmental Protection Agency also remains vacant after Michael Dourson, another controversial appointee who faced Republican opposition, bowed out of the confirmation process in mid-December.

HEALTH

Republicans wrapped up 2017 with one health care victory: the repeal of Obamacare’s individual mandate. But Congress will be coming back into session with a hefty to-do list that got lost in the shuffle.

This includes the Children’s Health Insurance Program, which provides coverage to roughly 9 million low-income kids whose families do not qualify for Medicaid. Lawmakers put a short-term patch in the continuing resolution with $2.85 billion in new funds to help states last through March. The patch was necessary because lawmakers failed to come to an agreement over how to pay for a five-year extension of the program before the end of the year.

Republicans also pushed legislation to stabilize the Obamacare marketplaces into the new year. McConnell backed the bills in order to lock in Sen. Susan Collins’s vote for the tax-reform bill. The bills would restore the cost-sharing subsidies for two years and provide money for reinsurance programs. But the proposals are not very popular among House Republicans.

Other Obamacare taxes are being eyed for suspension. House Ways and Means Committee Republicans introduced bills to delay a handful of Affordable Care Act taxes largely opposed by industry stakeholders, including the health insurance tax, the medical-device tax, the high-cost-plan tax (also known as the “Cadillac tax”), and the employer mandate.

Meanwhile, some Republican lawmakers are agitating to bring back Obamacare-repeal efforts and are considering a proposal from Sens. Bill Cassidy and Lindsey Graham. The proposal turns Obamacare spending—including for the tax credits and Medicaid expansion—into block grants to states.

TAXES

The $1.4 trillion tax-overhaul bill is in the books, but the work of congressional tax writers is never over. There are two major sets of tax bills on deck as Congress returns.

First, the Senate Finance Committee released a tax-extenders bill just before jetting off for Christmas break. The bill would renew several tax provisions that expired at the end of 2016, including high-dollar energy breaks such as a $1-per-gallon credit on biofuel, and a few, smaller provisions, such as a tax break for Puerto Rican rum and another for racehorses.

Critics say lawmakers should have addressed extenders in the overhaul bill, and House Ways and Means Chairman Kevin Brady has said he doesn’t like Congress’s habit of doing tax policy on a temporary basis, as they’ve done for about a decade. But industries such as renewable energy and nuclear power have been pushing for the breaks in the extenders bill, and they’ve got powerful Senate backers such as Finance Committee members John Thune and Johnny Isakson.

Second, House Ways and Means Committee Republicans released a series of bills in mid-December that would again delay several taxes related to the Affordable Care Act, including a 2.3 percent tax on medical devices and the Cadillac tax. Many of these taxes have been repeatedly pushed back, and provisions such as the medical-device tax have opponents in both parties.

“A lot of work has been done in a bipartisan, bicameral way,” Ways and Means Chairman Kevin Brady told reporters in December. “Now with the end of the year and tax reform done, it clears the decks to move those things forward.”

It’s unclear whether lawmakers will advance these bills on their own or if they would try to attach them to must-pass legislation, such as the upcoming measure to fund the federal government.

But the eyes of the tax world will also turn to the Internal Revenue Service, which will be entering the 2018 filing season as it ramps up to implement the sweeping tax bill. Republicans have been reluctant to provide additional funding to the agency, which has been a GOP punching bag for years, but some lawmakers say they’ll be monitoring the agency’s need for additional resources in the new year.

TECHNOLOGY

The Senate will have fewer than three weeks to tackle the thorny issue of surveillance reform when it returns Tuesday—and the House, which doesn’t return until Jan. 8, will have just two.

In late December—after months of stop-and-start debate—Capitol Hill kicked the reauthorization of Section 702 of the Foreign Intelligence Surveillance Act into 2018, tacking a provision on last month’s continuing resolution that pushes the program’s sunset date from Dec. 31 to Jan. 19. The program gives the National Security Agency the ability to eavesdrop on the electronic communications of foreigners, but also allows for the “incidental” collection of American communications and grants law enforcement access to those communications.

The intelligence community and some lawmakers sought to extend the program without reforms, but were stymied by bipartisan opposition from lawmakers seeking to cut down on incidental collection and limit law enforcement’s access to Americans’ data. That opposition was particularly pointed in the House, where in late December, the House Freedom Caucus torpedoed House Intelligence Committee Chairman Devin Nunes’s push for a long-term reauthorization of Section 702 with limited restrictions put in place on the FBI’s ability to view the communications of American citizens.

WHITE HOUSE

Back in town after his golf vacation in Florida, Trump has a light public schedule at the White House, featuring primarily lunches with Vice President Mike Pence and his secretaries of State, Defense and Labor. On Friday, he leaves for Camp David where he will meet with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell over the weekend.

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