December 18, 2015

The House and Senate passed a short-term continuing resolution funding the government through Dec 22 giving Congress additional time to negotiate and pass a $1.15T FY16 omnibus appropriations bill (HR 2029) that included a $680B permanent tax extension package (Protecting Americans from Tax Hikes) as well as cybersecurity legislation and an FY16 Intelligence Authorization.

The House approved HR 2820, an Act to reauthorize the Stem Cell Therapeutic and Research Act of 2005; HR 4246, the National Guard and Reservist Debt Relief Extension Act; S 1090, the Emergency Information Improvement Act of 2015; HR 2297, the Hezbollah International Financing Prevention Act of 2015; and HR 3750, the First Responders Passport Act of 2015.  

The Senate passed by unanimous consent or voice vote HR 2270, the Billy Frank Jr. Tell Your Story Act; S 571, the Pilot’s Bill of Rights; HR 2576, the TSCA Modernization Act; S 227, the Strengthening Education through Research Act; HR 515, International Megan’s Law; S 2261, the Rural ACO Provider Equity Act; HR 4246, the National Guard and Reservist Debt Relief Extension Act; S 284, the Global Magnitsky Human Rights Accountability Act; HR 3594, a bill temporarily extending the Federal Perkins Loan Program; S 238, the Eric Williams Correctional Officer Protection Act; HR 3831, the Securing Fairness in Regulatory Timing Act; S 1616, the Saving Federal Dollars Through Better Use of Government Purchase and Travel Cards Act; S 2425, the Patient Access and Medicare Protection Act; HR 1321, a bill amending the Federal Food, Drug, and Cosmetic Act; S 2152, the Electrify Africa Act; HR 4188, the Coast Guard Authorization Act; S 1155, the GONE Act; S 1893, the Mental Health Awareness and Improvement Act; and S 2044, the Consumer Review Freedom Act.

The Senate confirmed the following nominations: Alissa Starzak to be General Counsel of the Department of the Army, John Conger to be a Principal Deputy Under Secretary of Defense, Stephen Welby to be an Assistant Secretary of Defense, Franklin Parker to be an Assistant Secretary of the Navy, Gabriel Camarillo to be an Assistant Secretary of the Air Force, Patrick Murphy to be Under Secretary of the Army, Miriam Lew to be Chief Financial Officer at the Department of Transportation, Anthony Rosario Coscia and Derek Tai-Ching Kan to be Directors of the Amtrak Board of Directors, John Lettre to be Undersecretary for Intelligence at the Department of Defense, Thomas Melia to be an Assistant Administrator at USAID, Thomas Rothman to be a Member of the National Council on the Arts, Carlos Torres to be Deputy Director of the Peace Corps, Suzette Kimball to be Director of the United States Geological Survey, and Steven Haro to be Assistant Secretary of Commerce.

FY16 Omnibus Appropriations Bill Passed

With the current continuing resolution (CR) funding the federal government set to expire at midnight on December 16, the House and Senate passed another short-term stop-gap spending bill funding the government through December 22. The President signed the bill into law and attention then turned to a long-term agreement.

Early Wednesday morning, House and Senate leadership reached an agreement that funded federal agencies through next September and permanently extended several tax breaks. The omnibus also contained a bicameral compromise bill on cybersecurity as well as compromise text of the Intelligence Authorization Act for FY16. The $1.15T FY16 omnibus appropriations bill passed the House Friday morning by a vote of 316 to 113 with 95 Republicans and 18 Democrats voting against the measure. The bill then passed the Senate by a vote of 65 to 33 with 26 Republicans, 6 Democrats, and 1 Independent voting against the measure. Presidential candidate Sen. Marco Rubio (R-FL) and Sen. Barbara Boxer (D-CA) both missed the vote. The bill now goes to the President who has said he will sign it.

The final agreement did not include several of the controversial policy riders (e.g. blocking a new federal clean-water rule, delaying or rejecting Syrian refugees, rolling back Dodd-Frank regulations, overturning the Labor Departments rule regulating retirement advisors, denying funding for Planned Parenthood, etc.) that had been holding up individual spending bills earlier this year. But it did lift a four-decade-long ban on exporting crude oil. Democrats agreed to include the provision in the final agreement in exchange for extending some tax incentives for wind and solar energy. The bill also toughened visa rules for those entering the United States, requiring citizens of 38 states who are currently exempt from needing a visa, to obtain one if they recently traveled to Syria, Iraq, Iran, or Sudan. And it extends the World Trade Center Health Program through 2090 for first responders and survivors of the 9/11 attacks, while also funding the September 11^th Victim’s Compensation Fund for five additional years by increasing H1B entry visa fees and biometric entry-exit fees.

The FY16 omnibus spending bill does adhere to a bipartisan budget agreement passed by Congress in October that raised previously imposed spending caps. It appropriates $1.067T in base discretionary budget authority and $73.7B in Overseas Contingency Operations (OCO). The Congressional Budget Office scored the final agreement and determined that the final omnibus spending package will add more than $57B to budget deficits over the next 10 years. The spike in debt is largely attributed to the suspensions of health care taxes and extensions of energy tax breaks included in the final agreement.

*Source: federalnewsradio.com

** This request was shifted to the Defense OCO account, though $160 million of it would eventually be shifted to the Coast Guard, which falls under DHS.

Tax Extenders

The Protecting Americans from Tax Hikes (PATH) Act makes permanent changes to the tax code. The House voted on Thursday 318 to 109 (with 214 Republicans voting yes) to pass the tax cut package, the first of two steps in the House to pass the final omnibus package. The Senate passed it as part of the omnibus package on Friday.

The package includes permanent extensions of business breaks like the research and experimentation credit, deductions for sales, and the $500,000 cap for small business expensing. It also includes extensions of credits geared for low-income workers, such as the Earned Income Tax Credit and the American Opportunity tax credit for education expenses.

The bill also delays two taxes in the Affordable Care Act that were designed to help pay for expanded insurance coverage – the “Cadillac” tax which imposes an excise tax of 40% on high-cost employer plans (those who value exceeds $10,200 for individual coverage and $27,500 for a family) and a tax on medical devices.

A summary of the PATH Act can be found at:

http://waysandmeans.house.gov/wp-content/uploads/2015/12/SECTION-BY-SECTION-SUMMARY-OF-THE-PROPOSED-PATH-ACT.pdf

Cybersecurity

Omnibus Includes Bicameral Compromise on Cybersecurity

The omnibus also contained a bicameral compromise bill on cybersecurity. The compromise provides that the Department of Homeland Security (DHS) is the sole portal for companies to voluntarily share cybersecurity information with the federal government and expressly prohibits the military and NSA from potentially becoming a portal. It provides liability protections to private companies that voluntarily share cyber threat indicators defensive measures with DHS, or with each other, and requires them to review and remove and Personally Identifiable Information (PII) unrelated to cyber threats before sharing the information with the federal government. It enhances DHS’ ability to more effectively secure federal networks and authorizes DHS to execute intrusion detection and prevention capabilities when an imminent cyber threat to an agency information system is identified. This legislation also includes provisions to improve Federal network and information system security, provide assessments on the Federal cybersecurity workforce, and provide reporting and strategies on cybersecurity industry-related and criminal-related matters. Finally, it requires DHS to be co-author of all the privacy procedures to ensure that the robust privacy protections already in place at DHS’ cyber operations center, the NCCIC, will be “baked” into all privacy procedures for information sharing.

GAO on Agency’s Promotion of NIST Cybersecurity Framework

The Government Accountability Office (GAO) released a report this week critical of DHS’ efforts to promote the National Institute of Standards and Technology’s (NIST) Cybersecurity Framework. NIST originally published the framework of voluntary cybersecurity standards in 2014, and DHS has encouraged industry to use it. However, DHS has not been measuring the results of its advocacy. GAO criticizes DHS saying that without metrics, Homeland Security officials don’t know what is working and what isn’t working. In addition to developing metrics, GAO recommends that DHS and GSA set a time frame to determine whether implementation guidance is needed for the government facilities sector. DHS and GSA concurred with the recommendations.

GAO Report:

http://www.gao.gov/assets/680/674300.pdf

Interest Rates

Federal Reserve Chair Janet Yellen decided to raise its benchmark interest rate by 0.25 percent this week to 0.5 percent. The move was widely expected and Wall Street took it in stride. It marks the first time the central bank has raised the rate in almost 10 years, signaling confidence that the economy has finally recovered from the 2008 financial crisis. The rate was cut to near zero at the height of the crisis to spur an economic recovery. The Federal Reserve emphasized it will likely lift the rate “gradually” thereafter.

House Speaker Ryan 2016 Preview Video

In what looks more like a movie trailer, House Speaker Paul D. Ryan (R-WI) continued his digital outreach this week releasing his 2016 preview video. Speaker Ryan sent his video to his GOP colleagues to preview his plan for running the House in 2016.

The one-minute video can be viewed at:

https://www.youtube.com/watch?v=NIOR5dPkM5Q&feature=youtu.be

Political Updates

New Hampshire Secretary of State Bill Gardner revealed this week that the state’s primary will be February 9 (eight days after the Iowa caucuses). Gardner unveiled a poster commemorating the 100^th anniversary of the first primary that included sample ballots with the Feb. 9 date.

Dr. Ellen Hughes-Cromwick was appointed to serve as the Department of Commerce’s new Chief Economist. Dr. Hughes-Cromwick is on leave from the University of Michigan’s Ross School of Business, following an 18-year career with the Ford Motor Company where she served as the chief global economist. She also served as a senior economist at Mellon Bank, an assistant professor at Trinity College, and a staff economist on the President’s Council of Economic Advisers.

Ashkan Soltani is leaving the Federal Trade Commission where he is the Chief Technologist and joining the White House as a Senior Advisor to the U.S. Chief Technology Officer.

Veterans Affairs (VA) CIO Laverne Council announced on Thursday that Ron Thompson will join the VA Office of Information and Technology as Principal Deputy Assistant Secretary starting Jan. 10. Thompson has been the Director of IT and Infrastructure at the Department of Health and Human Services. He replaces Stephen Warren who left VA in August. He will oversee VistA Evolution, the major upgrade of the VA’s electronic health record system.

President Obama nominated Alan Kreczko and James White to be Members of the Internal Revenue Service Oversight Board, Andrew Mayock to be Deputy Director for Management at the Office of Management and Budget, and Edith Ramirez to be a Federal Trade Commissioner.

The president of the White House Correspondents’ Association (WHCA) announced this week that Larry Wilmore, host of “The Nightly Show with Larry Wilmore,” will be the entertainer at the WHCA dinner on Saturday, April 30.

Next Week

The House and Senate have adjourned for the year. The House will reconvene on January 5, 2016 and the Senate will reconvene on January 11, 2016. House Majority Leader Kevin McCarthy (R-CA) released a statement today saying that the House will vote on budget reconciliation when they return in January. The bill will repeal the Affordable Care Act (Obamacare) and replace it with a patient-centered health care system as well as prohibit federal funding for Planned Parenthood.