While government funding and tax reform remain at the forefront of lawmakers’ concerns, this week’s work is likely to focus on behind-the-scenes negotiations. On tax reform, the first public conference meeting is set for Wednesday and reports suggest that Republicans are making progress in working out the differences between the House and Senate tax bills. President Trump will continue his lobbying campaign for the tax bill with a speech at the Treasury Department on Wednesday. On the current timeline, Republican leaders are aiming to bring the tax bill to the floors both the House and Senate during the week of Dec. 18 and will try to send the bill to the president’s desk before Christmas.
The Week in Review
Lawmakers temporarily avoided a government shutdown by passing a two-week continuing resolution (CR) in both chambers last week, setting up Dec. 22 as the new deadline to fund the government. That effort is expected to be a lot more contentious as Democrats will be seeking policy concessions in exchange for their votes, most notably on the deferred action for childhood arrivals (DACA) program. Conservatives have also threatened to sink a possible package over the continued use of CRs and what they see as excessive government spending. The government funding fight will coincide with expected legislative packages addressing the expiration of funding for the Children’s Health Insurance Program (CHIP), the National Flood Insurance Program (NFIP), and a slate of so-called health care “extenders.”
With a government funding deadline looming on Friday, the House is poised to vote today on a two-week continuing resolution (CR) (H.J.Res. 123) that would extending funding for federal agencies through Dec. 22. The measure would also allow the federal government to continue directing funds to states for the Children’s Health Insurance Program (CHIP) through the remainder of the year, as it would waive a proration rule to give the Centers for Medicare and Medicaid Services (CMS) flexibility to allocate currently-available redistribution dollars to any state that exhausts its federal CHIP funding through Dec. 31.
Although the looming Friday deadline for government funding remains central to congressional discussions this week, both chambers are carrying on with business as usual in their floor action today. Senate Majority Leader Mitch McConnell (R-KY) is expected to lay the House Message for conference on the tax reform bill before the Senate, triggering 10 hours of debate. Votes on the motions to instruct conferees and to go to conference with the House are expected during today’s Senate session. Behind the scenes, Republican lawmakers are already starting to negotiate a reconciled version between the chambers’ two bills, with the primary point of contention being over the elimination of the state and local tax (SALT) deduction and any provisions that would soften the impact of that move.
A House vote to send the tax reform bill to conference last night was nearly derailed after a surprise threat from the House Freedom Caucus to block the motion as a means to protest the anticipated two-week continuing resolution (CR) that Republican leadership has been plotting to use to keep the government open beyond Dec. 8. The group of conservative lawmakers eventually backed down from their threats and the motion was passed 222-192, but the maneuver creates a new dynamic in the fight to fund the government this week. House leadership reportedly broke the impasse by assuring Freedom Caucus members that the CR will extend to Dec. 30 rather than the proposed Dec. 22 date, which conservatives believe will provide them additional leverage. With Democratic support for a funding measure also highly tenuous and reliant on policy concessions, Republican leadership will be treading carefully in the days ahead to try and avoid a government shutdown.
- The House and Senate will commence the first formal conference for a major tax reform bill since the showdown in Gucci gulch. At this point the conference is anticipated to last around a week to give both sides enough time to get a bill to the President before the end of the year.
- There will be two financial services bills up on the floor this week, both requiring a rule for passage. The first, would broaden the registration exemption for merger and acquisition brokers (H.R. 477), while the second aims to provide regulatory relief on escrow requirements for community financial institutions (H.R. 3971). Both are expected to pass.
- The Senate Banking Committee will vote on the nomination of Jerome Powell on Tuesday and then move to take up the Crapo Reg Relief bill.
- Funding for the government is set to expire on Friday.
Even after the Senate’s approval of tax reform legislation last week, the issue will remain in the headlines. The House returns ahead of schedule today to consider a motion to go to conference on the tax reform bill, allowing for lawmakers to reconcile the differences between the two versions of the legislation. Republicans hope that the conference process will last about a week, giving lawmakers time to get a bill to the president’s desk before the Christmas holiday.
The Week in Review
The tax reform debate in the Senate consumed nearly all of the political oxygen in Washington last week, ultimately culminating in a 51-49 passage of the proposal in the wee hours of Saturday morning. Despite many Republican senators expressing reservations, the only “no” vote from the majority came from Sen. Bob Corker (R-TN), who has been adamant that he would not vote for a tax bill that adds to the deficit without measures that could boost revenues in the future. The Senate’s approval marks a significant step forward in the tax reform effort and prospects for its enactment look good barring a serious reversal of fortunes.
The tax reform effort in the Senate has reached its make-or-break moment as Republican leaders hope to put the finishing touches on the package and approve it in the upper chamber today. The plan hit a hiccup yesterday after the Senate parliamentarian ruled that the so-called ‘revenue trigger’ did not comply with Senate rules, briefly bringing the votes of Sens. Bob Corker (R-TN), Jeff Flake (R-AZ), and Ron Johnson (R-WI) on a motion to recommit into doubt. They eventually fell in line, but the fiscal hawks are still seeking a policy change that will help allay some of the costs of the tax reform package – estimated yesterday to be $1 trillion by the Joint Committee on Taxation (JCT) even after accounting for economic growth.
The Senate tax reform bill cleared another hurdle last night after the upper chamber approved the motion to proceed on a straight party-line vote, 52-48. Despite the movement, the policy divides that have given many Republican senators pause in supporting the proposal are still salient and a series of changes are likely to come in the form of a manager’s amendment to be submitted at the end of floor consideration. Debate on the bill will continue on the Senate floor today, with dozens of amendments from both parties lined up to be considered on the floor. A vote-a-rama is expected to start later today, concluding with the expected submission of the manager’s amendment that will likely make up the final text of the bill. If Republican leadership thinks they have the votes, a final up-or-down vote could come as early as tonight or may be pushed to tomorrow.