March 27, 2015

The House and Senate both passed their FY16 budget resolutions this week. The House also passed HR 2, the Medicare Access and CHIP Reauthorization Act of 2015. The Senate passed S 535, the Energy Efficiency Improvement Act and confirmed William Doyle to be a Federal Maritime Commissioner. 

FY16 Budget Resolution

The House and Senate approved their FY16 budget resolutions this week setting up a conference committee on the measures when they return from recess the week of April 13. If they can come to agreement on a conference report, they can then start work on the FY16 appropriations bills as well as the reconciliation process. The last time Congress agreed on a budget resolution was in 2009.

House FY16 Budget Resolution

The House passed its FY16 budget resolution on Wednesday by a vote of 228 to 199, with 17 Republicans voting in opposition. The House utilized a “Queen of the Hill” or “winner takes all” approach when considering six budget resolutions on the floor, meaning that they would adopt the resolution that got the most votes out of those that got a simple majority. The winning budget resolution offered by House Budget Committee Chairman Tom Price (R-GA) keeps defense and nondefense spending at $523 billion and $493 billion, respectively, in line with the 2011 Budget Control Act (BCA); but it increases by $38 billion the limit on the Overseas Contingency Operations (OCO) account to $96 billion and removes a requirement that any of this increase be offset.

Senate FY16 Budget Resolution

The Senate passed their FY16 budget resolution by a vote of 52 to 46 in the wee hours Friday morning. The Senate resolution also adheres to the spending caps set in the 2011 BCA and includes $96 billion in OCO funding. However, the resolution also includes a budgetary point of order against spending more than $58 billion in the OCO account. A budgetary point of order requires 60 votes to waive. Senate Armed Services Committee Chairman John McCain (R-AZ) had intended to offer an amendment to raise the point of order threshold from $58 billion to $96 billion, but in the end decided not to because of opposition from fiscal hawks in his own party. This budgetary point of order could complicate the FY16 defense appropriations process later this year as any FY16 defense spending bill that funds the OCO account above $58 billion would require 60 votes to overcome the budgetary point of order.

Medicare Physician Payment Formula – “Doc Fix”

The current payment patch for the Medicare physician payment formula expires on March 31, causing a 21% cut in physicians’ reimbursement rates. The House passed HR 2, the Medicare Access and CHIP Reauthorization Act of 2015 this week, which provides a permanent fix for the Medicare doctor payments dictated by the sustainable growth rate (SGR) formula, and extends the Children’s Health Insurance Program (CHIP). Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Harry Reid (D-NV) said that the Senate would take up the legislation after they return from their two-week recess. Senate Democrats were requesting votes on a limited number of amendments including a four-year extension of the CHIP instead of the two-year extension included in the House-passed bill. While the current “doc fix” patch expires during the recess, the Centers for Medicare and Medicaid Services could hold off on processing claims for two weeks giving the Senate time to act when it returns the week of April 13. The agency has done this in the past, but has not yet announced its intentions for this expiration date.

Cybersecurity

The House Permanent Select Committee on Intelligence marked up and passed out of committee by voice vote HR 1560, the Protecting Cyber Networks Act (PCNA) (http://intelligence.house.gov/ProtectingCyberNetworksAct). A manager’s amendment making technical changes to the bill was adopted by voice vote prior to final passage in committee this week. The bill would increase the sharing of cyberthreat indicators between the government and the private sector. To allay privacy concerns, the bill specifies that private companies must make reasonable attempts to scrub any personally identifiable information from the data before they share it with the government. The civilian agency receiving the data must do another round of scrubbing private data before it can be shared with NSA or DoD. And the bill specifically prohibits the use of data collected for any government surveillance purposes.

The Senate Intelligence Committee has also passed a similar cybersecurity bill, S 754, the Cybersecurity Information Sharing Act (CISA) (https://www.vantagepointstrat.com/?p=369). Both Intelligence Committee bills are expected to be considered in their respective chamber’s floors after the two-week recess, with the Senate likely to go first.

The House Homeland Security Committee has also released a draft information sharing bill, the National Cybersecurity Protection Advancement Act (https://www.vantagepointstrat.com/?p=372), which provides a path for companies to share cyberthreat data with the Department of Homeland Security. The committee hopes to mark up that bill after the return from the two-week recess.

Defense Acquisition Reform

House Armed Services Committee (HASC) Chairman Mac Thornberry (R-TX) and Ranking Member Adam Smith (D-WA) released a draft acquisition reform bill (HR 1597) this week that focuses on a set of reform measures to be included in the FY16 National Defense Authorization Act. According to Thornberry, these measures are just the first step in a multiyear, incremental reform program for the Department of Defense, based on a guiding principle of “first do no harm,” and built upon the notion that a successful acquisition system is proactive, agile, transparent, and innovative.

The draft acquisition reform bill focuses on the following four areas:

People

• Removes the barriers that discourage the best uniformed personnel from pursuing an acquisition profession including by ensuring they receive appropriate credit for joint duty – a vital requirement for officers who hope to attain senior ranks.
• Makes permanent the Defense Acquisition Workforce Development Fund (DAWDF), a temporary pool of money Congress established in 2009 to boost hiring and professional development within DoD. The DAWDF pilot program is currently set to expire in 2018.
• Requires all DoD acquisition personnel receive mandatory acquisition ethics training as well as training on commercial markets and commercial market research.
• Requires training on the commercial market including commercial market research to help close the gap between government and industry.

Acquisition Strategy

• Requires every program to have an upfront, written acquisition strategy, which will include things like what type of contract vehicle is best suited for the program objectives and the level of program risk, whether multi-year is appropriate, risk mitigation strategies, incentives (such as shared savings on services), etc. This would eliminate six different bureaucratic requirements. The strategy would be updated as needed throughout the life of the program.
• Reverses Pentagon procurement rules that give preference to fixed-price contracts that require contractors to pick up the tab if projects go over budget. The draft bill would make it easier for program managers to choose other contract types, including cost-plus deals in which contractors and the government share in paying for cost overruns.
• Encourages shared savings through the use of value engineering in which contractors identify ways to reduce the cost of performance on existing contracts and shares with the government any savings produced.

Streamline the Chain of Command for Acquisition Decisions

• Reduces extensive, non-productive legal reviews and certifications that DoD has to make at key acquisition decision points and instead converts them into simpler go-or-no-go management decisions.
• Streamlines the acquisition strategy approval process, including by raising the dollar threshold for simplified acquisition procedures.
• Clarifies that the roll of the testing community is to just test, not to manage the program or make acquisition decisions. Allows those close to the program to make the determination for moving from development to acquisition stages.
• Eliminates a rule that mandates that competitive prototyping be used in acquisition programs unless program managers get a waiver.

Thin Out Regulations and Paperwork

• Eliminates some reporting requirements for program managers.
• Eliminates dozens of reports Congress currently requires DoD to draft and deliver each year.

The committee also released draft report language that lays the groundwork for reform in future years. For example, the report language requests DoD to provide additional data on service contracts, which have been experiencing significant problems. While Thornberry would like to address this issue this year, the committee lacks sufficient information to draft a legislative solution right now. Thornberry said that he is trying to avoid creating new regulations and therefore more bureaucracy with this legislation.

Thornberry intends to use the FY16 National Defense Authorization Act (NDAA) as the vehicle for this acquisition reform bill. The NDAA will be marked up in the HASC full committee on April 29.

A copy of the draft bill can be found at:

http://armedservices.house.gov/index.cfm?a=Files.Serve&File_id=0536B323-C097-4A25-979E-983AB6210B13

A copy of the report language can be found at:

http://armedservices.house.gov/index.cfm?a=Files.Serve&File_id=71F8382B-D158-4358-9171-85B688F18BE3

The HASC Defense Reform Fact Sheet can be found at:

http://armedservices.house.gov/index.cfm?a=Files.Serve&File_id=6BA52738-8917-46EB-8777-84B1E6A704C4

Chairman Thornberry’s remarks can be found at:

http://armedservices.house.gov/index.cfm?a=Files.Serve&File_id=8D259E50-DF11-441B-880B-4E008B65E396

FTC Bureau of Consumer Protection Creates Office of Technology Research and Innovation

This week the Federal Trade Commission’s (FTC) Bureau of Consumer Protection announced that it had formed an Office of Technology Research and Investigation (OTRI). The FTC is tasked with protecting consumers from deceptive and unfair practices involving new technologies. The new OTRI succeeds the FTC’s Mobile Technology Unit in its role of protecting consumers in emerging marketplaces. However, OTRI will have a broader mandate looking beyond the technology just surrounding mobile devices. The new office will focus on investigative research on technology issues involving all facets of the FTC’s consumer protection mission, including privacy, data security, connected cars, smart homes, algorithmic transparency, emerging payment methods, big data, and the Internet of Things.

House Appropriations Subcommittee Assignments

House Appropriations Committee Chairman Hal Rogers (R-KY) announced updated Republican rosters for the 12 Appropriations subcommittees for the 114^th Congress. The changes were prompted by the addition of Rep. Steven Palazzo (R-MS) joining the Appropriations Committee.

The subcommittee Chairs and Members are as follows:

Agriculture Subcommittee:

Chairman Robert Aderholt (R-AL)

Kevin Yoder (R-KS)

Tom Rooney (R-FL)

David Valadao (R-CA)

Andy Harris (R-MD)

David Young (R-IA)

Steven Palazzo (R-MS)

Commerce, Justice, Science Subcommittee:

Chairman John Culberson (R-TX)

Robert Aderholt (R-AL)

John Carter (R-TX)

Jaime Herrera Beutler (R-WA)

Martha Roby (R-AL)

David Jolly (R-FL)

Steven Palazzo (R-MS)

Defense Subcommittee:

Chairman Rodney Frelinghuysen (R-NJ)

Kay Granger (R-TX)

Ander Crenshaw (R-FL)

Ken Calvert (R-CA)

Tom Cole (R-OK)

Steve Womack (R-AR)

Robert Aderholt (R-AL)

John Carter (R-TX)

Mario Diaz-Balart (R-FL)

Tom Graves (R-GA)

Energy and Water Subcommittee:

Chairman Mike Simpson (R-ID)

Rodney Frelinghuysen (R-NJ)

Ken Calvert (R-CA)

Chuck Fleischmann (R-TN)

Jeff Fortenberry (R-NE)

Kay Granger (R-TX)

Jaime Herrera Beutler (R-WA)

David Valadao (R-CA)

Financial Services Subcommittee:

Chairman Ander Crenshaw (R-FL)

Tom Graves (R-GA)

Kevin Yoder (R-KS)

Steve Womack (R-AR)

Jaime Herrera Beutler (R-WA)

Mark Amodei (R-NV)

Scott Rigell (R-VA)

Homeland Security Subcommittee:

Chairman John Carter (R-TX)

John Culberson (R-TX)

Rodney Frelinghuysen (R-NJ)

Chuck Fleischmann (R-TN)

Andy Harris (R-MD)

Chris Stewart (R-UT)

David Young (R-IA)

Interior Subcommittee:

Chairman Ken Calvert (R-CA)

Mike Simpson (R-ID)

Tom Cole (R-OK)

David Joyce (R-OH)

Chris Stewart (R-UT)

Mark Amodei (R-NV)

Evan Jenkins (R-WV)

Labor, Health and Human Services Subcommittee:

Chairman Tom Cole (R-OK)

Mike Simpson (R-ID)

Steve Womack (R-AR)

Chuck Fleischmann (R-TN)

Andy Harris (R-MD)

Martha Roby (R-AL)

Charlie Dent (R-PA)

Scott Rigell (R-VA)

Legislative Branch Subcommittee:

Chairman Tom Graves (R-GA)

Mark Amodei (R-NV)

Scott Rigell (R-VA)

Evan Jenkins (R-WV)

Steven Palazzo (R-MS)

Military Construction and Veterans Affairs Subcommittee:

Chairman Charlie Dent (R-PA)

Jeff Fortenberry (R-NE)

Tom Rooney (R-FL)

Martha Roby (R-AL)

David Valadao (R-CA)

David Joyce (R-OH)

David Jolly (R-FL)

State and Foreign Operations Subcommittee:

Chairwoman Kay Granger (R-TX)

Mario Diaz-Balart (R-FL)

Charlie Dent (R-PA)

Ander Crenshaw (R-FL)

Tom Rooney (R-FL)

Jeff Fortenberry (R-NE)

Chris Stewart (R-UT)

Transportation, Housing and Urban Development Subcommittee:

Chairman Mario Diaz-Balart (R-FL)

David Joyce (R-OH)

John Culberson (R-TX)

Kevin Yoder (R-KS)

David Jolly (R-FL)

David Young (R-IA)

Evan Jenkins (R-WV)

Appropriations Members Assigned to the Budget Committee:

Tom Cole (R-OK)

Mario Diaz-Balart (R-FL)

Steve Womack (R-AR)

Political Updates

In a video announcement released this morning, Senate Minority Leader Harry Reid (D-NV) announced that he would not seek re-election in 2016. Reid said that his recent accident and eye injury in January gave him some “downtime” and “time to think,” which played a part in his decision. Sen. Chuck Schumer (D-NY) declared his bid to succeed Reid and received Reid’s endorsement as well as commitments from an overwhelming majority in the 46-member Senate Democratic caucus. As Minority Whip, Sen. Dick Durbin (D-IL) is next in line, but he instead also endorsed Schumer for the position. Reid was first elected to the Senate in 1986.

A link to Sen. Reid’s retirement announcement video:

http://www.reid.senate.gov/press_releases/thank-you

Sen. Dan Coats (R-IN) also announced this week that he would not run for reelection in 2016. Coats said that he wants to focus on his work in the Senate rather than spending the next two years campaigning for reelection. Coats served in the Senate from 1989 to1999 and then returned again in 2011.

Rep. Steve Russell (R-OK) was given a seat on the House Armed Services Committee filling Rep. Palazzo’s (R-MS) seat. Palazzo moved to the Appropriations Committee last week. Russell had a 21-year career in the US Army prior to running for office. He completed the US Army Ranger School and deployed to assignments in the Arctic, the desert, the Pacific, Europe, Kosovo, Kuwait, Afghanistan, and Iraq. Before retiring as a Lieutenant Colonel, Russell earned the Legion of Merit, Bronze Star with Valor Device, and Oak Leaf Cluster.

President Barack Obama named Shailagh Murray, a former Washington Post and Wall Street Journal reporter, to serve as his new senior adviser, and tapped Jason Goldman, a Silicon Valley veteran, to become the White House’s first-ever chief digital officer. Murray replaces Dan Pfeiffer as a member of the president’s core team of advisers, and Goldman will take over and expand Pfeiffer’s role overseeing digital outreach by heading up an amped-up Office of Digital Strategy.

President Obama also nominated Dr. Wanda Austin to be a member of the President’s Council of Advisors on Science and Technology. Austin is President and CEO of The Aerospace Corporation, a Federally Funded Research and Development Center.

Next Week

The House and Senate are in recess for the next two weeks and return the week of April 13.

March 20, 2015

The House passed HR 1029, the EPA Science Advisory Reform Act of 2015; HR 1030, the Secret Science Reform Act of 2015; and S J Res 8, a resolution to block a rule from the National Labor Relations Board that would speed up union elections. The Senate confirmed the nominations of Carlos Monje to be Assistant Secretary for Transportation Policy at the Department of Transportation and Manson Brown to be an Assistant Secretary at the Commerce Department. The Senate failed five times to invoke cloture on S 178, the Justice for Victims of Trafficking Act of 2015 by votes of 55 to 43, 55 to 43, 57 to 41, 56 to 42, and 56 to 42. Sixty votes were needed for the bill to advance. Senate Majority Leader Mitch McConnell (R-KY) said yesterday that he is planning to schedule more roll call votes on S 178 and won’t schedule a vote on Loretta Lynch for attorney general until work on this bill is done.

FY16 Budget Resolution

The House and Senate Budget Committees released their FY16 budget resolutions and marked them up in committee this week. Both budgets adhered to the spending caps set by the 2011 Budget Control Act (BCA) and included reconciliation instructions for repealing the Affordable Care Act. The Senate used the Overseas Contingency Operations (OCO) fund to placate defense hawks’ demands for increased defense spending as well as fiscal hawks who fought to keep the BCA caps in place. The OCO fund is not subject to the BCA spending caps. The House attempted to do a similar maneuver, but did not have the votes to pass the amendment in committee. The House will instead look to the Rules Committee to resolve the funding issue next week. Both chambers will consider their budget resolutions on their respective floors next week.

House FY16 Budget Resolution

The House Budget Committee passed its FY16 budget resolution on a straight party line vote this week, but punted on voting on a plan to increase defense spending. The House base budget plan keeps defense and nondefense spending at $523B and $493B, respectively (in line with BCA caps), but proposes $94B in OCO (or Global War on Terrorism) funding, $20B of which is included in a “Defense Readiness and Modernization Fund.” The $94B is well above the administration’s $58B FY16 OCO request, but before the extra $20B can be allocated, equal savings must be found elsewhere. Rep. Todd Rokita (R-IN) had offered an amendment to remove the language that fenced off the additional $20B to appease Republican defense hawks, but was opposed by fiscal conservatives. So the fate of the amendment to increase defense funding will now be decided by the House Rules Committee next week. The Rules Committee will decide whether or not the amendment’s costs ($20B) need to be offset and how it will be incorporated into the rule for floor consideration. The rule could include language that would automatically make the OCO amendment in order or adopted. As Democrats are not expected to vote in favor of the budget resolution, any agreement in the Rules Committee will need to have the support of 218 Republicans for passage on the House floor. More than 70 House Republicans led by House Armed Services Committee Member Michael Turner (R-OH) have vowed to vote against the budget resolution if it doesn’t boost defense spending. But it is unclear if fiscal hawks will drop their support for the resolution if defense spending is increased.

Senate FY16 Budget Resolution

The Senate Budget Committee also passed its FY16 budget resolution along a party line vote of 12 to 10 and in line with the 2011 BCA spending caps. Before final passage, the committee adopted an amendment offered by Sen. Lindsey Graham (R-SC) that increased OCO funding by $38B to $96B in FY16. But they rejected a two-year plan offered by Sen. Patty Murray (D-WA) to replace sequestration and raise the defense and nondefense spending caps.

Cybersecurity

The Senate Select Committee on Intelligence released the updated text of its Cybersecurity Information Sharing Act (CISA) that was marked up in committee last week. The committee chairman Richard Burr (R-NC) said that he hopes to have the bill on the Senate floor after the Easter recess.

A copy of the Senate CISA bill can be found at:

https://www.vantagepointstrat.com/?p=369

A Vantage Point Strategies’ summary of the Senate CISA bill can be found at:

https://www.vantagepointstrat.com/?p=370

The House Homeland Security Committee also released a draft information sharing bill this week. The bill provides a path for companies to share cyberthreat data with the Department of Homeland Security. The committee hopes to mark up the bill after they return from the Easter recess, the week of April 13.

A copy of the Draft National Cybersecurity Protection Advancement Act can be found at:

https://www.vantagepointstrat.com/?p=372

And the House Permanent Select Committee on Intelligence held a rare open hearing this week on cybersecurity. Committee Chairman Devin Nunes (R-CA) said that his committee will introduce their cybersecurity legislation “soon,” which may be as early as next week. During the hearing, private sector witnesses from IBM, TSYS, FireEye, and the Financial Services Roundtable testified about current cyberthreats, countermeasures and information sharing including liability protection and privacy.

FY16 National Defense Authorization Act

The House Armed Services Committee will begin marking up its FY16 National Defense Authorization Act (NDAA) in subcommittees the week of April 20 with a full committee markup the following week on April 29. The committee hopes to have the bill on the House floor starting on May 13.

On the Senate side, the new Senate Armed Services Committee Chairman John McCain (R-AZ) said that he is considering changing the way his committee marks up the NDAA to an open forum, but that he will follow the wishes of the majority of the committee members. In the past the markup was done behind closed doors.

Political Updates

Rep. Aaron Schock (R-IL) announced his resignation effective March 31 following several weeks of questioning about his spending of taxpayer and campaign funds. Schock was first elected in 2008 for the seat vacated by former Transportation Secretary Ray LaHood. Schock held seats on the House Administration, Budget, and Ways and Means committees.

House Appropriations Committee Chairman Hal Rogers (R-KY) announced this week that Rep. Steven Palazzo (R-MS) was approved by the House Republican Steering Committee to serve on the Appropriations Committee in the 114^th Congress. Palazzo fills the seat vacated by former Rep. Alan Nunnelee (R-MS), who passed away earlier this year.

House Democratic Whip Steny Hoyer (D-MD) announced this week that Rep. Joaquin Castro (D-TX), who has served as an Assistant Whip on the Democratic Whip team, has been promoted the position of Chief Deputy Whip for the 114th Congress. Castro joins the current 114th Congress Chief Deputy Whip team: Senior Chief Deputy Whip Rep. John Lewis (D-GA) and Chief Deputy Whips Rep. Jan Schakowsky (D-IL), Rep. Diana DeGette (D-CO), Rep. G. K. Butterfield (D-NC), Rep. Debbie Wasserman Schultz (D-FL), Rep. Peter Welch (D-VT), Rep Keith Ellison (D-MN), Rep. Terri Sewell (D-AL), and Rep. Kyrsten Sinema (D-AZ).

Former White House Chief Information Officer Steve VanRoekel left the U.S. Agency for International Development (USAID) on March 13 after only six months. VanRoekel left the White House in September to serve as USAID’s chief innovation officer, overseeing the application of technology to help treat and contain the Ebola outbreak in West Africa. VanRoekel was the Obama administration’s second CIO, following Vivek Kundra. VanRoekel said that he does not have another job lined up, and was leaving to spend more time with his family.

Under Secretary of Defense for Intelligence Dr. Michael Vickers notified President Obama and Secretary of Defense Ash Carter that he will be retiring effective April 30. Vickers assumed this position in March 2011 earning him the honor of being the longest serving under secretary in this position in the department’s history. Previously, he served as the department’s first and only assistant secretary of defense for special operations/low-intensity & interdependent capabilities. He also served in the U.S. Army as a Special Forces non-commissioned officer and Special Forces officer, and was a CIA operations officer.

The President nominated Douglas Kramer to be Deputy Administrator at the Small Business Administration. Kramer is General Counsel at the United States Agency for International Development, a position he has held since 2013. Prior to this, he served in the White House as Deputy Assistant to the President and Staff Secretary, Deputy Associate Counsel for Presidential Personnel, and Special Assistant to the President and Associate Counsel to the President. Prior to serving in the White House, he served as Counsel in the Antitrust Division at the Department of Justice, an Associate at the law firm Covington & Burling, and as a Judicial Clerk in the Chambers of the Hon. Walter L. Carpeneti of the Alaska Supreme Court.

David Shulkin was nominated by the President to be the Under Secretary for Health at the Department of Veterans Affairs. Shulkin is President of Morristown Medical Center. He has served as President of the Atlantic Accountable Care Organization and as a Vice President of Atlantic Health. Dr. Shulkin has also been the President and CEO of Beth Israel Medical Center in New York, Chief Medical Officer of Temple University Hospital, Chief Medical Officer of the Medical College of Pennsylvania Hospital, Chief Quality Officer of the Drexel University School of Medicine, Chairman and CEO of DoctorQuality, Inc., and Chief Medical Officer and Chief Quality Officer of the University of Pennsylvania Health System.

The President also nominated LaVerne Horton Council to be Assistant Secretary for Information and Technology at the Department of Veterans Affairs. Horton Council is the CEO of Council Advisory Services and a former Corporate VP and CIO at Johnson & Johnson. She has also worked at Dell, Ernst & Young, Mercer Management Consulting, Accenture, the Tennessee Valley Authority, and State Farm Insurance. The positions Horton Council has been nominated for has been filled on an interim basis for nearly two years by Stephen Warren who stepped in after Roger Baker departed for the private sector.

Juan Garcia was nominated by the President to be Assistant Secretary of Defense for Manpower and Reserve Affairs at the Department of Defense. Garcia is the Assistant Secretary of the Navy for Manpower and Reserve Affairs. In 2006, he was elected to the Texas House of Representatives and has served as an attorney at Hartline, Dacus, Barger, Dreyer & Kern. Garcia was a Naval Aviator in the U.S. Navy, and after leaving active duty, he commanded a unit of Flight Instructors in the U.S. Navy Reserve where he continues to serve as a Reservist today.

Stephen Welby was nominated by the President to be Assistant Secretary of Defense for Research and Engineering at the Department of Defense. Welby is the Deputy Assistant Secretary for Systems Engineering at DOD and in the past, he was Director of Systems Engineering. He has worked at the Defense Advanced Research Projects Agency and the U.S. Army Research Laboratory.

Next Week

Both chambers will consider their FY16 budget resolutions next week. Votes on amendments could start as early as Monday evening in the Senate. The House will also take up a measure to replace Medicare’s physician payment formula, otherwise known as the “doc fix” (HR 1470).

March 13, 2015

The House was in recess this week. The Senate was expected to take up S 625, the Iran Nuclear Agreement Review Act of 2015, but Senate Majority Leader Mitch McConnell (R-KY) tabled the measure. Senate Democrats threatened to filibuster it saying that they wouldn’t vote for a bill about congressional approval of a potential Iran nuclear deal until after the key March 24 negotiation date has passed. The Senate instead turned to S 178, the Justice for Victims of Trafficking Act of 2015. This too was set aside after Democrats learned that the measure included a provision expanding the reach of the Hyde Amendment barring federal funds from being used to pay for abortions. The Senate did approve the nominations of Christopher Hart to be Chairman of the National Transportation Safety Board (NTSB), Tho Dinh-Zarr to be a member of the NTSB, Daniel Henry Marti to be the White House’s Intellectual Property Enforcement Coordinator, Michelle Lee to be Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office, and Jeffrey Hall and Dallas Tonsager to be members of the Farm Credit Administration Board.

Congressional Budget Office Score of President’s FY16 Budget Request

The Congressional Budget Office (CBO) released its updated 10-year baseline projection of spending, revenue, and deficits on Monday. According to CBO, the President’s FY16 budget request would shrink the deficit in FY16 to $380B, but deficits would grow from FY17-FY25 reaching $801B in FY25. The decrease in the deficit in FY16 would come from revenue increases including increased income tax receipts, comprehensive immigration reform, as well as spending reductions from lower Medicare and war spending. CBO also estimates that mandatory spending will be about 13% of GDP through FY21 and then rise to 14.1% by FY25. This is in contrast to the average of 9.3% of GDP over the past 50 years. Armed with CBO’s analysis, House Republicans continued their criticism of the President’s FY16 budget saying that the President wasn’t serious about solving the nation’s fiscal and economic problems.

In related news, the Treasury Department announced this week that the deficit has reached $386.5B so far in FY15, which is $10B more than at this time last year. Treasury is forecasting a $582.5B deficit for FY15 and $474.2B for FY16 compared to $483B in FY14.

White House TechHire Initiative

President Obama announced a new initiative this week aimed at training more people for well-paying jobs in the technology sector, including in cybersecurity, software development, and network administration. The initiative will empower Americans with the skills they need, through universities and community colleges but also nontraditional approaches like “coding bootcamps,” and online courses that can rapidly train workers. Key elements of the initiative include: Public/Private partnerships between communities and national employers, $100M in new federal investments for the Department of Labor H-1B grant program to support innovative approaches to providing lower skilled workers with training and employment opportunities, and commitments from private sector leaders to provide the tools and resources to scale continued innovation in technology training, with a focus on reaching underserved populations.

Debt Ceiling

Last February Congress passed the Temporary Debt Limit Extension Act, suspending the statutory debt limit through March 15, 2015. Beginning on Monday 3/16, the Treasury Department will take extraordinary measures to continue financing the government. Secretary Jack Lew sent a letter to Congressional leadership last Friday urging them to raise the debt limit as soon as possible. Lew also informed Congress that as of today “Treasury will suspend, until further notice, the issuance of State and Local Government Series (SLGS) securities. SLGS are special-purpose Treasury securities issued to states and municipalities to assist them in conforming to certain tax rules. When Treasury issues SLGS, they count against the debt limit.” CBO has estimated that the Treasury Department will exhaust its extraordinary measures by October or November. That could bring a debt ceiling showdown around the same time that the FY16 spending bills are due on Oct. 1.

Congress has voted three times since 2013 to suspend the debt limit. Senate Majority Leader Mitch McConnell (R-KY) has indicated that Senate Republicans may use a vote to raise the debt limit as an opportunity to pass other legislation. McConnell has also said that the debt limit will be handled over a period of months and vowed to avoid another debt limit crisis. The nation’s debt currently stands at $18.3T.

A copy of Secretary Lew’s letter to Congress can be found at:

http://www.treasury.gov/initiatives/Documents/Treasury%20Letter%20to%20Congress%20030615.pdf

FY16 Budget Resolution

The Senate Budget Committee is expected to unveil and markup its FY16 budget resolution next Wednesday and Thursday. The Republican resolution will balance the budget within 10 years and maintain the FY16 caps on defense and non-defense spending that were set in the 2011 Budget Control Act. Floor consideration may take place the week of March 23 before Congress adjourns for the Easter recess. Senate Budget Committee Ranking Member Bernie Sanders (I-VT) will not offer an alternative Democratic budget resolution, and will instead focus on promoting their fiscal priorities (ending sequestration, investing in job creation, and increasing the minimum wage) through amendments to the Republican budget during committee markup and floor consideration.

The idea of including a reserve fund in the budget resolution is being considered by Senate Budget Committee Republicans who are trying to balance the demands of both defense and fiscal hawks. Fiscal hawks support the lower level sequestration funding caps, while defense hawks have threatened to oppose any budget that limits defense spending. A reserve fund could allow limits on discretionary defense and non-defense spending to rise above sequestration levels as long as the higher spending was offset with spending cuts or revenue increases. Five (Ayotte, Wicker, Kaine, King, and Graham) of six senators who serve on both Senate Armed Services Committee (SASC) and Budget Committee are considering this new reserve fund. SASC Chairman John McCain (R-AZ) said this week that he is considering drafting an FY16 defense authorization bill that exceeds the sequestration caps.

On the House side, no date has been set yet for markup in the Budget Committee, but it is expected to take place next week. Ranking Democrat Chris Van Hollen (D-MD) said that he plans to introduce an alternative Democratic budget resolution.

Cybersecurity

The Senate Intelligence Committee approved their Cybersecurity Information Sharing Act (CISA) in a closed-door meeting yesterday by a vote of 14 to 1. Sen. Ron Wyden (D-OR) was the only member of the committee to oppose the measure citing concerns that it was a surveillance bill just by another name. The bill provides expanded legal liability to companies so that they can more easily share information with the government. Since the original draft was circulated a few weeks ago, some changes were made to the bill prior to markup to strengthen privacy protections. Senate Intelligence Committee Chairman Richard Burr (R-NC) hopes to bring the bill to the Senate floor in mid-April.

On the House side, both the Homeland Security and Intelligence Committees have been working on cybersecurity legislation and drafts could be out by the end of the month. The Homeland Security Committee’s bill will be limited by the committee’s jurisdiction and will likely focus on establishing a DHS information-sharing portal. The Intelligence Committee’s bill will be more in line with the Senate CISA bill. The House Judiciary Committee is providing the liability language for both bills. House Leadership is hoping to bring these cyber bills to the floor the third week of April, but it isn’t clear if they would be voted on individually or as amendments to each other.

Senate Homeland Security Agenda

In a speech before the US Chamber of Commerce this week, Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson (R-WI) talked about his agenda for the committee for 2015. Johnson said he is focused on advancing bills that can get at least 60 votes, which includes a permit-streamlining bill cosponsored by Sens. Portman (R-OH) and McCaskill (D-MO). He is also planning on holding several hearings on border security and other immigration issues. And since cybersecurity is a priority, he said that he is open to having his committee consider some sort of compromise bill, as he believes the Senate Intelligence Committee’s CISA bill may be too ambitious. The compromise would fall somewhere between what the Administration proposed earlier this year and the CISA bill. Johnson said another priority is to untangle the web of congressional oversight for DHS, consolidating the number of Senate Committees with jurisdiction over the agency. Finally, Johnson encouraged US Chamber of Commerce members to bring up their proposals for individual regulatory changes they would like to see enacted. He cautioned that smaller, piecemeal bills would be more practical than any big regulatory overhaul bill.

Political Updates

Rep. Donna Edwards (D-MD) announced that she would run for the Senate seat being vacated by Sen. Mikulski (D-MD) when she retires at the end of 2016. Rep. Chris Van Hollen (D-MD) announced his intention to run for the seat last week.

Terry Halvorsen, who became the Defense Department’s acting chief information officer (CIO) almost a year ago, has assumed duties as its permanent CIO as of March 8.

Next Week

The House may take up HR 1029, the EPA Science Advisory Reform Act of 2015 and HR 1030, the Secret Science Reform Act of 2015 after returning from a recess week. The Senate may consider the nomination of Loretta Lynch for attorney general. Lynch has been waiting several weeks for a floor vote facing opposition from Senate Republicans who disagree with Lynch on the President’s immigration actions. The Senate will also vote on the nominations of Carlos Monje to be Assistant Secretary for Transportation Policy at the Department of Transportation and Manson Brown to be an Assistant Secretary at the Commerce Department. And the Senate will hold a cloture vote on Tuesday morning on S 178, the anti-human trafficking bill.